Q3 2023 Full House Resorts Inc Earnings Call

Speaker 1: Right.

Speaker 2: Greetings and welcome to the Full House Resorts 3rd Quarter Ernex Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Louis Fanger, Chief Financial Officer of Full House Resorts. Please go ahead.

Greetings and welcome to the full house resorts third quarter earnings call at this time all pets.

So are in a listen only mode. A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Lewis Fanger, Chief Financial Officer of full House resorts. Please go ahead.

Speaker 3: Thank you and good afternoon everyone. Welcome to our third quarter earnings call. As always before we begin we remind you that today's conference call make him for looking statements that we're making under the safe harbor provisions of federal security laws.

Thank you and good afternoon, everyone welcome to our third quarter earnings call.

As always before we begin we remind you that today's conference call.

Contain forward looking statements that we're making under the safe Harbor provisions of federal security laws.

Speaker 3: 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.

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.

Speaker 3: We're also broadcasting this conference call at FullHouseResorts.com where you can find today's earnings release as well as all of our SEC filings. And then lastly, we do have some slides that we uploaded as well for you. If you go to investors.fullhouseresorts.com in the middle of the page, you'll see a banner with links. Click on Company Info and then Presentations. And you'll see a link to the third quarter slides that we'll reference here.

We're also 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 and then lastly, we do have some slides that we uploaded as well for you. If you go to investors <unk> full house resorts Dot com and the.

The middle of the page, you'll see a banner what's links click on company info, and then presentations and you'll see a link to the third quarter slides that are that will reference here.

Speaker 3: So with all that said, we'll get to your questions relatively quickly today because I know MGM is on deck in about 30 minutes, so But with all that said we had a very strong third quarter revenues increased 73% to 71.5 million dollars That rise was helped out by the temporary which opened back in February this year and it continues to ramp up

So with all that said, we'll get to your questions relatively quickly today, because I know M. G. Amazon deck in about 30 minutes, so but with all that said we had a very strong third quarter revenues increased 73% to $71 $5 million that rise was helped out by the temporary which opened back in February of this year and it continues.

Speaker 3: Compared to the second quarter of this year, the temporary showed pretty meaningful sequential improvement. Revenues at the temporary improved about 18% from $20 million in the second quarter of 2023 to almost $24 million in this third quarter. Adjusted property EBITDA rose 64% from $4.1 million to $6.8 million.

To wrap up.

Prior to the second quarter of this year that the temporary show a pretty meaningful sequential improvement revenues at the temporary improved about 18% from $20 million in the second quarter of 2023 to almost $24 million in this third quarter adjusted property EBITDA rose, 64% from $4 1 million to $6 $8 million.

Speaker 3: Circa did open their on-site sportsbook at the temporary in the third quarter, but really the meaningful addition that we're waiting for is the high-end restaurant, which is on-site and going through its final paces. The hiring process has already begun, and we expect to have that open at the end of this year.

Circuit did open their onsite sports book at the temporary in the third quarter, but really the meaningful addition that we're waiting for is the high end restaurant, which is onsite and going through its final paces. The hiring process has already begun and we expect to have that open at the end of this year.

Speaker 3: Elsewhere at the company, we had $5.8 million of accelerated revenues from the termination of two of our sports skin agreements. Even adjusting for that, though, we had a good quarter that exceeded consensus.

Elsewhere at the company, we had $5 $8 million of accelerated revenues from the termination of two of our sports and agreements even adjusting for that though we had a good quarter that exceeded consensus.

Speaker 3: flipping forward in the slides to slide five. You can see our usual renderings of Shamanee. We're very excited for this opening. If you know the history of gaming, then you know that the business model that has worked.

Flipping forward in the slides to slide five you can see our usual renderings of Chamonix. We're very excited for this opening if you. If you know the history of gaming then you know that the business model that has worked time and again as defined in Underpenetrated gaming market without any differentiated product.

Speaker 3: Time and again is to find an under penetrated gaming market without any differentiated product. And we think we found that in cripple creeks.

And we think we've found out and Cripple Creek are in our case, we have roughly 1 million people in the broader Colorado Springs area and the gaming spun per capita is about $170 per person per year for casinos that are within an hour of their feeder markets. You tend to see a per capita number that is double or even higher than that versus what you see.

Speaker 3: In our case, we have roughly 1 million people in the broader Colorado Springs area and the gaming spend per capita is about $170 per person per year.

Speaker 3: For casinos that are within an hour, their fetal markets, you tend to see a per capita number that is double or even higher than that, versus what you see currently in cripple creeks casinos.

In Cripple Creek casinos the.

Speaker 3: The national average, which includes many states where casinos are convenient, like Hawaii and Alaska and Utah, is two thirds higher than what we already see out of Cripple Creek as well. And so that stat alone is what gets us very excited for upcoming opening. But on top of all that, we've built a destination that really is unlike any other casino in the state, let alone in Cripple Creek. It is just beautiful on the inside. We think it will offer a compelling reason for Colorado residents to experience the extraordinary

The National average, which includes many states where casinos casinos are convenient like Hawaii and Alaska in Utah is is two thirds higher than what we what we already see out of Cripple Creek as well and so that stat alone is what gets us very excited for our upcoming opening but on top of all that we've built the destination that really is unlike any other casino in the.

State let alone in Cripple Creek. It is just beautiful on the inside we think it will offer a compelling reason for Colorado residents to experience.

Speaker 3: And in many cases, cripple Creek 2 for the very first time and then they continue to visit again and again.

And in many cases Cripple Creek too for the very first time and then they continue to visit again and again.

On slide six just a quick reminder of what we're building it's a quarter of a billion dollar project. It's a beautiful new casino. There's a hotel was the first four star product in the market, we're going to have a great steakhouse called 980, Prime which is being run by the people behind Barry's downtown.

Speaker 3: Just a quick reminder of what we're building. It's a quarter of a billion dollar project. It's a beautiful new casino. There's a hotel with the first four star product in the market. We're going to have a great stay-cow's called 980 Prime, which is being run by the people behind Barry's down town. Prime at Serca and 9th St. Cows in Las Vegas. There will be a rooftop pool, a spa, an integrated parking garage. It will be pretty grand. Our opening date remains December 26, which is just seven weeks away. We did create a fun ad campaign. It meant to generate excitement in the area while also getting a quick sneak peek into the building. At the very bottom of that slide you'll see

At circa nine steakhouse in Las Vegas, there will be a rooftop pool and spa and integrated parking garage. It will be pretty grant. Our opening date remains December 26th which is just seven weeks away. We did create a funny AD campaign. It meant to generate excitement in the area. While also giving a quick sneak peek into the building and that's the.

Very bottom of that slide you'll see our Youtube language, you can click on to get to the 62nd AD on TV in Colorado, what break it up into a shorter 15 second spots, but well. We'll also are the full thing digitally.

Speaker 3: slide seven. You can see the Valley Arrival Experience and the middle is the Valley drop off with the hotel rooms just above on the left of that page is a jewelry store and then in the front of the building and also to the right will be Casino Space.

Slide seven.

You can see the valet arrival experience in the middle of the valet drop off with the hotel rooms, just above on the left of that pages, a jewelry store and then in the front of the building and also to the REIT will be casino space.

Speaker 3: Slide 8 is a sneak peek at our table games pit. By the way, these photos were taken about a week and a half ago, but they're already pretty spiel. But nonetheless, in this photo, you can see the chandeliers being installed. Slide 9 is just me and us trying to show off the casino a little bit with that ruining the surprise for you. But you can see some of the ceiling detail here. It really is very different than what you'll see anywhere else in the market today.

Slide eight is a sneak peek at our table games pit Oh by the way. These photos were taken about a week and a half ago, but they're they're already pretty still but nonetheless in this photo you can see the chandelier is being installed.

Slide nine it's just me and US trying to show off the casino a little there without ruining the surprise for you, but you can see some of the ceiling detail here. It really is very different than what youll see anywhere else in the market today.

Speaker 3: Slide 10 is a view from our ballroom. The chandeliers are now installed, the carpet's done, though we've got them covered for protection up until opening day. This is where we've been storing and testing all of our slot machines, all of which, by the way, have arrived on site. Slot bases are a few days away from being installed, and we'll follow that very shortly by the slot machines themselves in their actual locations throughout the casino.

Slide 10 is our view.

From our ballroom. The chandelier is there now installed carpets done, though we've got them covered for protection up until opening day. This is where we've been storing and testing all of our slot machines all of which by the way have arrived on site a slot basis or a few days away from being installed and will follow that very shortly by the slot machine.

Themselves and their actual locations throughout the casino.

Speaker 3: Slides 11 and 12 are photos that we showed you last time, just giving you a sneak peek at some of the room product. Those are being shut off one by one as our furniture gets installed. And then slide 13 shows some of the beautiful nature views that you get from many of our guest rooms.

Slides 11, and 12, our photos that we showed you last time, just giving you a sneak peek at peak at some of the room product.

Those are being shut off one by one as our furniture it gets installed.

And then slide 13 shows some of the beautiful nature of use that you get from many of our Guestrooms.

Speaker 3: Outside of that, a quick look at liquidity. Our liquidity remains in a good spot. At the end of the quarter, we had $84 million of cash, including $58 million of cash that by design is reserved to complete Chamonix. Normal cage cash tends to hover around $10 million or a little bit more.

Outside of that a quick look at liquidity our liquidity remains in a good spot at the end of the quarter, we had $84 million of cash including $58 million of cash that by design is reserved to complete chamonix normal cage cash tends to hover around $10 million or a little bit more something that most people don't think of.

Speaker 3: Something that most people don't think about is our sports guns and how those are prepaid. And so in this fourth quarter, we're due to receive about $10 million in cash related to our skins. That includes $3.6 million already received in October from the terminated sports agreements. And then there's another $5 million due from circa in December , which is prepayment for their mobile operations in Illinois for all of 2024.

About is our sports games and how those are prepaid and so in this fourth quarter were due to receive about $10 million in cash related to our skins that includes $3.6 million already received in October from the terminated sports agreements and then theres another $5 million due from circa in December which is pre.

Payment for their mobile operations in Illinois for all of 'twenty 'twenty. Four we also have our we also have $13 million available under our credit facility all of which is available for us to draw.

Speaker 3: We also have $13 million available under our credit facility, all of which is available for us to draw.

Speaker 4: And that provides us even more cushion as we prepare for what's going to be a pretty big and momentous opening for this company at the end of December . So with all that said, Dan, did I miss anything or do you want to do some Q&A? No, I think we'll take some questions and we'll stay here as long as possible, but we are trying to make it easy for people to go to the MGM call because we know many of you will want to do that.

And that provides us even more cushion as we prepare for what's going to be a pretty big in <unk> opening for this company at the end of December.

So with all that said, Dan I, Miss anything or do you want to do.

It will take some questions from an AR.

Uh huh.

We'll stay here as long as possible, but we are trying to make.

Make it easy for people to go to the MGM Coke because we know many of you will want to do that so.

Speaker 4: But it was a great quarter. I'd be happy to talk about it for two hours. So we're happy to take questions.

Sure.

But it was a great quarter I I'd be happy to talk about it for two hours, but so we're happy to take questions.

Speaker 2: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is that the question queue. You May press star two if you'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker 2: First question comes from Ryan Sigdahl with Craig Hallam Capital Group. Please go ahead.

First question comes from Brian <unk> with Craig Hallum Capital Group. Please go ahead.

Speaker 5: Hey, good afternoon, guys. Curious if you could break down what you get a little bit more nice sequential revenue growth and margin uplift, but we're really seeing the efficiencies flow through and then any directional help for Q4 relative to Q3 based on what you've seen thus far in the quarter.

Hey, good afternoon, guys curious if you could break.

Breakdown, what you are getting a little bit more nice sequential revenue growth and margin uplift, but we're really seeing the efficiencies flow through and then any directional help for Q4 relative to Q3 based on what you've seen thus far in the quarter.

Speaker 4: Let me take it, just as we started this call, the numbers came out from Illinois for October .

I mean, let me take it.

And just as we started this called the numbers came out from Illinois for October.

Speaker 4: And we haven't been open before. October is normally seasonally a little weaker than September . And in fact, I think it was down about 3 million from September to October . And of course, Bali's open and did about eight. They did a little bit and we did. They have a lot more people around them.

And Oh, we haven't been opened before October is normally seasonally a little weaker.

Then September and in fact, I think it was down about $3 million from September to October and of course, our Bally's open ended.

About eight they did a little better than we did.

There are a lot more people around them.

Speaker 4: And we were off a little bit from September to October , not very much. We were still 7.3 million.

And we were we were off a little bit from September to October not very much we were still seven 3 million.

Speaker 4: And I think part of that seasonality, part of it's also we had a pretty big advertising campaign.

And and I and I think part of that seasonality part of it's also we had a pretty big advertising campaign. When we first opened that had kind of petered out and we have another one about to start which is a kind of emphasizes the excitement of the inside of the tent. So.

Speaker 4: when we first opened that had kind of petered out and we have another one about to start which is

Speaker 4: kind of emphasizes the excitement of the inside of the tent. So, you know, I think it's a fourth quarter's not, this is not a highly seasonal market and we have some like Tahoe that is highly seasonal.

I think it's it's it's a fourth quarter is not this is not a highly seasonal market and we have some like lake Tahoe that is highly seasonal.

Speaker 4: But I think the fourth quarter might be a little weaker than the third quarter in terms of revenues.

But I think the fourth quarter might be a little weaker than the third quarter in terms of revenues. No. You know we will see it as a new advertising campaign build revenues I hope it does with the part of the reason we're doing it we continue to build our mailing list, which helps our slot play.

Speaker 4: Now, we'll see. It does a new advertising campaign build revenues. I hope it does, as part of the reason we're doing it. We continue to build our mailing list, which helps our slot play. We're trying to get our stay costs open. It's probably going to be late in the quarter, but we're trying to get it open. We know that that's pretty important, especially if you're a table game play and high rollers.

We're trying to get our Steakhouse open is probably going to be late in the quarter, but were.

We're trying to get it open and we know that that's pretty important, especially for your table game play in high rollers.

Speaker 4: And hopefully it's open late in December and helps us drive New Year's Eve. New Year's Eve is really important in December , which then makes it important for the quarter. But the property continues to mature and it's doing just fine.

And are you now.

Hopefully it's open late in December and helps Us drive new year's Eve.

New year's Eve is really important in December, which then makes it important for the quarter.

But you know the property continues to mature and it's doing just fine so.

Speaker 5: Good. Continuing on the trend of all performance moving to the West segment, it had been revenue down each Q1, Q2 EBITDA had been roughly zero in each of those quarters with the construction at Bronco Billings and this quarter showed a nice improvement on revenue and on the bottom line, I guess.

Good.

Continuing on the trend of OLT performance moving to the West segment.

It had been revenue down each Q1, Q2, EBITDA had been roughly zero in each of those quarters with the construction at Bronco Billy's.

This quarter showed a nice.

Moving on revenue and on the bottom line I guess can you comment on what specifically going on which properties within that segment are doing better.

Speaker 5: comment on what's specifically going on which properties within that segment are doing better?

Speaker 4: Well, part of what we had done, at one point, we had renovated the middle part of the Bronco Billies Casino. So a year ago, the heart of it was actually closed. It's been open now since early this year, if I recall correctly. So it's still heavily disrupted, but a lot less disrupted than it was a year ago at this time.

Well, we are part of what we had done.

At one point.

We had renovated the middle part of the Bronco Billy's casino, so a year ago like the heart of it was actually closed.

It's been open now since our early this year, if I recall correctly. So it wasn't it's still heavily disrupted but a lot less disrupted than it was a year ago at this time.

Speaker 4: But, you know, the interim results out of Brock O'Billy's are...

But you know that.

The interim results at Bronco, Billy's or minor compared to what Chamonix is likely to do for that segment I mean, it's.

Speaker 4: minor compared to what Chaminade is likely to do for that segment.

Speaker 4: It's not unlike what Monarch did in Blackhawk, you know, they bought the old Riviera and added

It's not unlike.

What monarch did in Black Hawk, you know they bought the old Riviera and added Oh renovated the casino and added the hotel tower and tore down the parking garage built the new parking graduate center et cetera, They never actually closed their casino, but the the old the Riviera.

Speaker 4: well, renovated the casino and added the hotel tower and tore down a parking garage, built a new parking garage, et cetera, et cetera. They never actually closed their casino, but the old Riviera didn't make much compared to what Monarch is making now, and it's kind of the same sort of thing we're doing. And like them,

Didn't make much compared to what monarch is making now and it's kind of the same sort of thing we're doing and like them.

Speaker 4: you know, we will open, but it will be kind of a soft opening. We're not planning a grand opening party on December 26th or anything like that. Frankly, we're scrambling to get open and, you know, we're hiring people now. We, of course, already have 150, 250 employees. We're trying to pick up another 100.

We will we will open but it'll be kind of a soft opening we're not planning a grand opening party on December 26, or anything like that because frankly, we're scrambling to get open and and then you know and we're hiring people now we have of course already have 102 hundred 50 employee.

We're trying to pick up another 100 and.

Yeah.

Speaker 4: We won't have everything open on December 26th. We will have 300 guest rooms, all the guest rooms. We'll have the casino, all the casino. We'll have the high-end restaurant. We'll have the parking garage. We'll have the surface customer lot.

We won't have everything opened on December 26 that we will have 300 guestrooms all all the Guestrooms will have the casino all the casino.

We'll have the high end restaurant will have the parking garage will have the surface customer lot.

Speaker 4: There's an Italian restaurant that won't be ready for several months after this, the spa will not be ready, there's like a speakeasy bar that will not be ready, but it's a speakeasy so nobody will know it's there anyway.

There is an Italian restaurant that won't be ready for several months. After after this the spa will not be ready, there's like a speakeasy bar that will not be ready.

Boats of Speakeasy, and nobody will know what's there anyway.

And.

Speaker 4: And you end up in a situation where all the key drivers that will make this successful will be ready by December 26.

And you end up in situations like all the key drivers that will that that will make the successful will be ready by December 26th. So you wouldn't want me to wait two months until the spas done I mean, it will go ahead and open and.

Speaker 4: So you wouldn't want me to wait two months until the spa's done. I mean, we'll go ahead and open.

Speaker 4: And so we'll open on December 26th and then as quickly as we can finish the other stuff. And the

And so we will open on December 26, and then as quickly as we can finish the other stuff.

And in the.

Speaker 4: And that other stuff, it's like the finishing work in the spa, so it's not anything that would be disruptive to a customer's experience. And so we're excited about being open. And then we'll have a grand opening party in the spring, which is very much the same as Monarch did.

And that other stuff.

You know, it's like the finishing work in the spot. So it's not anything that would be disruptive to our customers experience.

And so we're excited about being open and then we'll have a grand opening party in the spring, which is very much the same as monarch did.

Speaker 4: And I know Durango Station postponed their opening, but I think they figured they couldn't get the publicity they wanted with Formula One in town. And I think that may have been a factor of that as well. So we're a little different. We're much more similar to Monarch. We're going to get the doors open, get some revenue coming in, and then build from there.

And I and I know, our Durango station postpone their opening but I think they figured they couldnt get the publicity they wanted with formula one in town and I think that may have been a factor of that as well so.

We're a little different we're much much more similar to monarch, we're going to get the doors open and get some revenue coming in and and then build from there.

Speaker 3: And apologies if this isn't what you're asking to Ryan, but if you're looking sequentially from 2Q to this third quarter, Grand Lodge actually benefited pretty nicely. What you had in the second quarter of this year was a lot of, well, you had a very bad winner to be quite honest and a lot of snow. And that's no lingered for the long this time. So usually what would happen in our second quarter around Memorial Weekend is the locals would come back.

And apologies if this isn't what you're asking too Ryan, but if you're looking sequentially from <unk> to the third quarter.

Yeah Grand Lodge actually benefited pretty nicely, while you had in the second quarter of this year was a lot of.

Well you had a very bad winter to be quite honest and end up in a lot of snow and and that's no lingered for the longest time, so usually what would happen in our second quarter around memorial weekend is the locals would come back.

Speaker 3: and start gambling again. And this year because there was so much snow that was sitting around, they didn't come back in the second quarter, they didn't really come back until Fourth of July weekend. And so sequentially we got a pretty nice bump from Grand Lodge just having the locals back in town. okay.

And and start gambling again in this year because there was so much snow that was sitting around they didn't come back in the second quarter. They didn't really come back until fourth of July weekend, and so so sequentially. We get we got a pretty nice bump from from Grand Watch just having the locals back in town.

Yeah.

Great I'll turn it off together.

Thanks, guys.

Speaker 2: Next question, Chad Bainard with Macquarie, please go ahead.

Yes. Thank you question Chad Beynon with Macquarie. Please go ahead.

Afternoon, guys nice quarter.

Thank you.

Speaker 6: Wanted to start just kind of honing in on on some of the OPEX items. It's obviously been a topic on other operator calls this quarter, just in terms of labor, utilities, some different contracts. Understanding that probably most of your costs on the labor side are going to be coming at temporary and then and then Chaminade. I guess you were kind enough to break out, you know, the Midwest and South. And it looks like

I wanted to to.

To start just kind of honing in on some of the Opex items. It's obviously been a topic on other operator calls this quarter just in terms of labor utilities some different contracts.

Understanding that probably most of your cost on the labor side, we're gonna be coming a temporary and then and then show them any I guess you were kind enough to break out you know the mid western sounds like margins were down a little bit probably you.

Speaker 6: margins were down a little bit, probably roughly in line with revenues. But can you just talk about where we are on the inflation journey, on the expense side, if you feel like things are under control, if you're going to see additional creep in the back half of 23 and beyond, or if things are kind of status quo there? Thanks.

You know roughly in line with revenues, but can you just talk about kind of where we are on the on.

On the inflation journey on the expense side, if you feel like things are under our control if youre going to see additional creep in the back half of 'twenty, three and beyond or if things are kind of status quo. There. Thanks.

Well.

Speaker 4: Obviously, at Chamonix, we have to hire people, and we're in an isolated location up in the mountains. And so in some job categories, we have to pay up to attract people. On the other hand, the tip positions, if you visit the town, it's pretty obvious we're going to be the center of action, and if you're a tipped employee, you're going to make more money with us than you are anywhere else in town. So I think...

Obviously, it's chamonix, we have to hire people and we're in an isolated location up in the mountains.

And so in some job categories, we have to pay up to attract people on the other hand, the tip positions. If you visit the town, it's pretty obvious we're going to be the center reaction and and if you're a tipped employee you're going to make more money with US then you are anywhere else in town. So so I think.

Speaker 4: there will be OK. If you're talking about normal inflationary pressure.

There will be okay, if you're if you're talking about like normal inflationary pressure.

You know six months ago, I was getting a lot of pushback and it was kind of like depressed would say inflation year over year was up 7% and so it seemed like every employee one at a 7% raise.

And I'd point out that our revenues.

Most properties were not accept in percent and in the inflation index. There are things like cost of houses or cost of a new car and if you didn't buy a new car. If you didn't buy a new house your cost of living didn't change and and you pushed back I think now that you've.

Speaker 4: cost of houses or cost of a new car. And if you didn't buy a new car, if you didn't buy a new house, your cost of living didn't change and you pushed back. I think now that you've had lower, or at least press articles of lesser inflation and...

<unk> had lower or at least press articles of lesser inflation.

And.

Speaker 4: and things like that. A little bit of that pressure has gone away. The last employment statistic actually showed unemployment up a little bit. Now, Colorado Springs is still a very tight labor market.

And things like that a little bit of that pressure has gone away.

The last employment statistics actually showed unemployment up a little bit now, Colorado Springs is still a very tight labor market.

Speaker 4: But one of the things we're doing in Colorado Springs that takes a lot of the pressure off us is we've.

But you know what.

One of the things we're doing in Colorado Springs that takes a lot of the pressure off of us as we've.

Speaker 4: Taking a page from the Hayataho, Hayataho outsources their housekeeping.

Taking a page from from the Hyatt Tahoe Tahoe outsources their housekeeping to a third party a number of hotels are doing that these days and so we've chosen to do the same thing with the company that is going to do our housekeeping.

Speaker 4: to a third party. A number of hotels are doing that these days and so we've chosen to do the same thing. While the company that is going to do our housekeeping

Speaker 4: does the housekeeping for the hospital in Woodland Park, which is the second largest employer in the county, and they also do the housekeeping for the five hospitals down in Colorado Springs.

Does the housekeeping for the hospital and Woodland Park, which is the second largest employer in the county and they also do the housekeeping for the five hospitals down in Colorado Springs.

Speaker 4: And so Woodland Park is 18 miles from us. And then it, in turn, is about 20 miles from Colorado Springs. So it's easy for them to transfer housekeepers from Woodland Park to us, to our property, and then replace them with people from Colorado Springs.

And so woodland Park is 18 miles from US and then it in turn is about 20 miles from Colorado Springs. So it's easy for them to transfer housekeepers from woodland park to us or to our property and then replace them with people from Colorado Springs.

Speaker 4: And so they can move people around. They've already got a workforce and so on. And after negotiating with them, we looked at what we would pay them by the hour.

And so they can move people around they've got already got a workforce and so on and when we after.

After negotiating with them when we looked at what we would pay them by the hour and what it was going to cost us by the hour. It was kind of a wash and and they have more resources than we do to move people around and supervise people and so on so that's about a third of the employees we need to hire.

Speaker 4: and what it was going to cost us by the hour. It was kind of a wash. And they have more resources than we do to move people around and supervise people and so on. So that's about a third of the employees we need to hire were resolved with that contract.

Resolved would that contract and so were.

Speaker 4: that helps us a lot. Then about a third of the other employees are tipped employees and that's going to be relatively easy. And then the last part.

That helps us a lot.

And then about a third of the other employees are tipped employees and that's going to be relatively easy and.

And then the last part where we're working on so I think we'll be okay a bit in waukegan.

Speaker 4: So I think we'll be OK up in Waukegan. We continue to hire people. It's a little more of a challenge there because every employee down at the dishwasher has to go through gaming licensing. And somebody who

We continue to hire people, it's it's a little more of a challenge there because every.

Every employee down to the dishwasher has to go through gaming licensing and you know somebody who.

Speaker 4: might be applying for a dish washing job. That's a pretty big hurdle when they can go to the Amazon warehouse next door and not have to fill out a 30-page form. We've been working through that, and we have a pretty stable employee base now, but it's been a little bit of a struggle.

Might be applying for a dishwashing job, that's a pretty big hurdle when they can go to the Amazon warehouse next door and not have to fill out a 30 page form.

We've been working through that and we have a pretty stable employee base now.

But it's been a little bit of a struggle.

<unk>.

Speaker 4: Anyway, that's the bottom line. I, I, I, you know, we, we get asked all the time. You see signs of a recession.

Anyway, that's the bottom line.

That's right.

We get asked often you see signs of a recession.

Speaker 4: Sometimes I think there might be, but particularly in Mississippi, which is where the economy seems to be a little weak.

So sometimes I think there might be but particularly in Mississippi, which is where the economy seems to be a little weak.

Speaker 4: And then all of a sudden, we'll have a good weekend. And then it's like, well, no, maybe there isn't a recession. And then people ask, are you feeling inflation? It's like, well, on the revenue side, no, I wish our revenues are growing 7% at the older properties.

And then all of sudden we'll have a good weekend and then it's like well no maybe there isn't a recession and then people ask are you feeling inflation, it's like well on the revenue side no I wish your revenues are growing 7% at the older properties.

Speaker 7: And, I think

And.

I think it's one of those things when the press is filled with talk about inflation then everybody starts looking for a raise and with the prestigious shut up about it maybe we wouldn't have as much inflation.

Speaker 4: Yeah it's one of those things when the press is filled with talk about inflation and everybody starts looking for a raise and if the press would just shut up about it maybe we wouldn't have as much inflation.

Speaker 4: Some of you may not be familiar, in an earlier life I lived in Brazil and the Brazilian government

Some of you may know.

In earlier life I lived in Brazil.

The Brazilian government at one point had to admit that they lie and that was because the Sao Paulo newspaper did.

Speaker 4: had to admit that they lie. And that was because the South Paulo newspaper did the, an analysis of a bunch of prices from one year to the next. And they concluded that inflation was 100% when the government was saying was 70% and the inflation rates were nuts. And the Minister of Finance in Brazil said, well, actually as a tool of combating inflation, we understate what inflation is. Anyway, sorry. Good.

An analysis of a bunch of prices from one year to the next and they concluded that inflation was 100% when the government was saying was 70% I mean, the inflation rates were nuts.

Ministry of finance in Brazil, said, well actually as a tool of combating inflation, we understate what inflation is.

Sorry.

Little aside.

Speaker 6: Thanks, Chath, for opening up that kind of warms. Yeah. Always good, Darl. Thank you for that. Yeah. And then, you know, Dan, a lot of times when we're talking to investors, it's always the what's next after, after Shamanee, Lewis, you kind of laid out the spend per head and the market and the opportunity there. And I thank everyone.

Thank you Scott for opening a can of worms.

[laughter] alright, thank you for that.

And then you know Dan a lot of times when we're talking to investors. It's it's always the what's next after after show. Many Lewis you kind of laid out the the spend per head in the market and the opportunity there and I think everyone's onboard with returns that could come out of this but you know after that soap and you'll have to you know new proper.

Speaker 6: on board with the returns that could come out of this. But after that's open, you'll have two new properties, one property down in the south. That's a good cash cow that the sports business is and then a few other smaller properties. But just in terms of kind of the three year portfolio or how you're thinking about what to do with the cash, whether it's...

<unk> one property down in the South that's a good cash cow the sports businesses and then and then a few other smaller properties, but just in terms of kind of the three year portfolio or how you're thinking about you know what to do with the cash whether it's pay down the debt buy back stock at these levels or look to.

Speaker 6: pay down the debt, buy back stock at these levels, or look to grow the business. Can you kind of give us a little peek into 24, 25, kind of the what's next after you open up Shawmini right after Christmas?

To grow the business can you kind of give us a little peak into 'twenty four 'twenty five kind of the what's next after you open up so many right after Christmas.

Speaker 4: Well, we get Chamonix open, and it'll take a while to mature, just like it's taken American Place a little while. I mean, and just as a

Well, we got Germany opened and it'll it'll.

It'll take a while to mature just like it's taken American place little while I mean.

Just as it did a lot of shield lebaron.

Speaker 4: the bears and so on. I mean, these things, uh, uh, you know, the second year is almost always better than the first, the third year is better than the second. Usually about that time it's kind of mature. And, uh, uh, now it's.

The bearish and so on I mean, these things are.

Yeah, the second years, almost always better than the first and third years, but in the second and usually about about that type of it's kind of mature.

And.

Now at some point.

Speaker 4: the city of Waukegan and the State Gaming Commission will probably get that lawsuit resolved from the Potawatomi tribe.

<unk>.

The city of Waukegan, and the state Gaming Commission will probably get that lawsuit resolved from the Potawatomi tribe.

Speaker 4: And when they do, then it's hard for us to go arrange financing for the permanent casino. When you have a lawsuit out there arguing that you should restart the licensing process, it's kind of an absurd lawsuit, but it's out there. And when that's resolved, I would expect the, and it might be a year to eight.

And when they do then it's hard for us to go arrange financing for permanent casino. When you have the lawsuit out there, arguing that you should restart the licensing process, it's kind of an absurd lawsuit, but it's it's out there.

As a result, I would expect.

And it might be a year to 18 months.

Speaker 4: uh... and one that happens by then frankly we're going to be one of the least leveraged casino companies out there

And when that happens by then frankly, we're going to be one of the least leveraged casino companies out there and hopefully the bond markets in better shape.

Speaker 4: and hopefully the bond market's in better shape, and we will go raise the money to build the permanent casino.

And we will go raise money to build the permanent casino in Waukegan. Our obligation is to invest I think the number is about $325 million going forward or it was 500 million less what we've invested state so.

Speaker 4: in Waukegan. Our obligation is to invest, I think, the numbers of about $325 million.

Speaker 4: going forward. It was $500 million less what we've invested to date.

Speaker 4: And a lot of what we've invested to date is parking lots and land acquisition, so that's really for the permanent.

And a lot of what we've invested to date is parking lots and land acquisition. So that's really for the permanent and the license fee itself. So.

Speaker 4: and license for yourself. So, and the permanent will be much

And when it will be much a more obvious and nicer casino then the tent. We're operating in now so we still have that ahead of us, it's a pretty big task.

Speaker 4: more obvious and nicer casino than the tent we're operating in now. So we still have that ahead of us, it's a pretty big task.

Speaker 4: It's not immediate because the lawsuit has it has it kind of on hold for now We hope they resolve the lawsuit pretty quickly, but the courts are pretty backed up these days

It's not immediate because the lawsuit has it is it kind of on hold for now.

We hope the result, the lawsuit pretty quickly, but the courts are pretty backed up these days.

Speaker 4: So, in the meantime, we'll continue to grow the business and improve the balance sheet. You know, somewhere down the road, we do have the entitlements to build a hotel tower at the Silver Slipper, and it would make sense to do it. We've just been a little busy with other stuff that I think has a higher ROI than that. But at some point, if we're generating excess cash and...

So in the meantime, we will continue to grow the business and improve the balance sheet.

Somewhere down the road, we do have the entitlements.

To build a hotel tower.

The silver slipper and it would make sense to do it and we've just been a little busy with other stuff that we think is a higher rois than that but at some point, if we're generating excess cash and.

Speaker 4: Looking for something to do that's a growth opportunity that that exists for us

Looking for something to do that's a growth opportunity that exists for us.

Speaker 4: And in a three-year time frame, that's kind of what we have in mind. OK. I mean, we don't see any other markets to go into. I think the markets we're in are pretty good. Even Chamonix is designed to be able to be expanded at some point. And we own a piece of land to do that on. But let's get it open first.

And and a three year timeframe, that's kind of what we have in mind.

Okay.

We don't see any other markets to go into I think the markets we're in a pretty good.

Even chamonix is designed to be able to be expanded at some point and we own a piece of land to do that on.

But let's get it open first.

Thanks, guys I appreciate it.

Thank you Chad.

Speaker 2: Next question, Jordan Bender with JMP Securities. Please go ahead.

Next question Jordan Bender with JMP Securities. Please go ahead.

Speaker 8: Great, thanks for taking my question. It looks like reservations and shamany the hotel did open the other day. I was wondering if you could just share maybe like what you're seeing in terms of bookings, whether you want to talk about 80 are and just given some of that demand. Could that be kind of a forward leading indicator into into some of the demand for that project?

Great. Thanks for taking my question it looks like reservation in Chamonix. The hotel did open the other day I was wondering if you could just share maybe like what you're seeing in terms of bookings whether you want to talk about ADR and you know just given some of that demand could that be kind of a forward leading indicator into.

<unk> into some of the demand for that project.

Speaker 4: Well, we haven't publicized yet that it and a big way that reservations are open. And in fact, I was a little chagrin when I saw it because for the first several days, it really should be held for our casino customers. And so we're fixing that. We have a mailing list there over 100,000 names now.

Well, we haven't publicized yet that are in a big way that the reservations are open and in fact I was a little chagrined when I saw it because for the first several days it really should be held for a casino customers and so we're we're fixing that.

And we have a mailing list there are over 100000 names now some of those people are probably dead been built over 25 years of Bronco Billy's is operated but Theres 20000 regular people who are we see all the time and of course, we want to make sure we accommodate them early.

Speaker 4: Some of those people are probably dead, because it's been built over 25 years. The Bronco Billings has operated. But there's 20,000 regular people who we see all the time. And of course, we want to make sure we accommodate them early on.

Early on.

And.

Speaker 4: So, you know, the bookings we have are, you know, it's only been a few days, so I wouldn't expect it to be at all material. But people will want to see it. The ad campaign is just starting. It's a really cute.

So in the.

The bookings, we have or you know, it's only been a few days.

Wouldn't expect it to be at all material.

People will want to see it the AD campaign is just starting its it's a really cute.

Speaker 4: uh... series of ads and uh... they'll be pretty prominent in colorado springs and in denver and that will build and uh... you know it's not only it's a you know three hundred guest rooms on any given night is around five hundred people in the property we only have eight hundred slot machines

Series of ads and there'll be pretty prominent in Colorado Springs and in Denver.

And that will build and so not only it's a you know 300 guestrooms on any given night is around 500 people in the property, we only have 800 slot machines.

Speaker 4: uh... and we will continue to get a lot of day trip customers as well and and so uh... uh... that the revenue will be there will it be there on December twenty six

And we will continue to get a lot of day trip customers as well and so the revenue will be there will be there on December 26.

Speaker 4: I don't know. The day after Christmas, probably be pretty busy. I actually, there was a sight of me that hopes were not completely slammed because our employees will still be learning the building, learning their jobs. And you gradually build up. I mean...

The day after Christmas will probably be pretty busy.

I I actually Theres a side of me that hopes were not completely slammed because their employees are still been learning the building learning their jobs and our new grads.

Gradually build up I mean.

Speaker 4: And so, you know, so like Stations is actually concerned, Stations Casinos, and they're good operators, they're going to open Durango Station, it's the first new local's casino that's opened here in a while, and there's two million people that live in this town, we all drive past Durango Station, and they will be swamped with people, and they will be on the day they open. So they said we want to make sure they have all their employees trained and everything else. You know, we're 45 minutes up in the mountains. It's a lot of people. It's a lot of people.

And so yes. So like stations is actually concern station's casinos and they're good operators, they're going to open Durango stations. The first new Local's Casino that's opened here in a while.

And there's 2 million people live in this town, we all drive past Durango station.

And they will be swapped with people and they will be on the day. They open. So they said we want to make sure. They have all their employees trained and everything else. We're 45 minutes up in the mountains.

Speaker 4: And I think people will find us. I remember when we opened La Baire's, which was two hours from Houston.

And I think people will find us I remember when we opened the bearish, which was two hours from Houston I wondered whether people would show up with so many people show up in the first day that they were threatened to close down the freeway interchange, which was a mile from the property because the traffic was backing up under the freeway.

Speaker 4: I wondered whether people would show up. We had so many people show up on the first day that they threatened to close down the freeway interchange, which was a mile from the property because the traffic was backing up onto the freeway. And so, you know, sometimes it builds slowly, sometimes it builds more quickly. I expect this to build somewhat slowly just because of where it is and because, you know, most people in Colorado Springs have been to Cripple Creek at some point in the past.

And and so you know sometimes it builds slowly sometimes it builds more quickly I expect this to build somewhat slowly just because of where it is and because you know most people in Colorado Springs have been creek at some point in the past.

Speaker 4: And if you went there before, it looked kind of like if you've ever been to Virginia City.

And if you went there before it looks kind of like if you've ever been to Virginia City, Nevada.

Speaker 4: Nevada, it's like a little historic town with little anybody casinos and you go there and you look at it. And our task is to tell them that no, this isn't the Colorado. This isn't the Crepe of Creek, you knew. This is a different Crepe. This is a colleague when the Mirage opened in Las Vegas in 1989, you know, all the marketing in Las Vegas up until that was cheap buffets and cheap hotel rooms and lounge singers. And the Mirage introduced a whole different type of casino and it changed.

Little Historic town with Little Lady Casinos, and you go there and you look at it.

And our task is to tell them that know this isn't the Colorado. This isn't the Cripple Creek you knew this is a different cripple Creek. This is a it's kind of like when the Mirage opened in Las Vegas 1989, you know the all the marketing in Las Vegas up until that was cheap buffets, and cheap hotel rooms, and and lounge singers and.

Mirage introduced a whole different type of casino and.

And it changed the market.

Speaker 4: And that's a little bit of what we're doing in Colorado Springs on a smaller scale.

And that's a little bit of what we're doing in Colorado Springs on a smaller scale, our TV ads haven't yet started daring that's literally happening this week jordans.

Speaker 3: Yeah, our TV ads haven't yet started airing. That's literally happening this week, Jordan. So it's a good question, but ask me again in a week or two is probably the better thing to tell you. I will tell you this, though. It is.

It's a good question, but ask me again in a week or two is probably the better thing to tell you I will tell you. This though it is it is beautiful and I know I think that whenever I meet with people, but when you walk into that building for the first time.

Speaker 4: It is beautiful, and I know I keep saying that whenever I meet with people, but when you walk into that building for the first time, you know, it is, your jaw will drop because it is truly a special place that is unlike anything else in that state. Quite honestly, it's wind quality, and that's not surprising because the designers are people who worked on the wind product. Yeah, that's right.

It is your jaw will drop because it is truly a special place that is unlike anything else in that state quite out of its wind quality and that's not surprising because these are people who worked on the wind product yeah, that's right and so and in the hotel itself is four seasons quality, it's and it's the designers the design firm.

Speaker 4: And so, and the hotel itself is Four Seasons quality, and it's the designers.

Speaker 4: The design firm we used for the hotel is the same design firm that we used at the Four Seasons in St. Louis, who did the Four Seasons in Jackson Hole, who did a...

We used for the hotel has the same design firm that we used at the four seasons in St. Louis who did the four seasons in Jackson hole, who did have a.

Speaker 4: number of montage properties and that's the quality of what it is.

Number of montage properties it and that's the.

Quality of what it is and.

Speaker 4: You know, to do that in Cripple Creek is a little stunning. There's some local people in town who think I'm nuts, but I think it'll work, because I've seen it work before.

To do that in Cripple Creek is a little stunning theres some local people in town with think I'm nuts, but Uh huh.

Could it work because I've seen it work before so.

Speaker 8: Great. And then just, you know, to kind of bled into my follow-up question here, I think the original benchmark for Colorado was about $50 million at the EBITDA. Is that still kind of the right way to think about the project return with, you know, where you guys sit now, about a month and a half out? Yeah, I think so, but don't expect us

Great and then just you know that kind of led into my follow up question here I think the original benchmark for Colorado was adult $50 million of EBITDA is that still kind of the right way to think about project return with you know where you guys sit now about a month and a half out.

Yeah, I think so but don't expect us to do you know.

Speaker 4: $6 million in January . I mean, it takes a while to get there. I mean, Monarch is doing north of $100 million. In fact, I heard somebody talk, I said that to somebody who was a big shareholder of theirs, who said, no, no, they're doing like $120 million now. And I said, well, that's great news.

$6 million in January.

It it it takes a while to get there I mean monarch is doing north of $100 million picked I heard somebody someday I said that to somebody who is a big shareholder there as we said no no they're doing like 120, now and so that's great news.

They are.

Speaker 4: 500 rooms were 300 rooms. And the casinos aren't much different in size. So if we could do 50, I'd be pretty happy. And that's less than half of what they're doing. And they're the principal competitor. Our ads quite clearly say we're the best casino in the state.

500 drums were 300 rooms.

And in the casinos are much different in size so.

If we could do 50, I'd be pretty happy and that's less than half of what they're doing and.

They're they're they're the principle competitor.

Our our ads quite clearly say, we're the best casino in the state.

Speaker 4: They're pretty good, too. I mean, I think we're better because we have a better footprint. Their footprint, they had to be very long and narrow. But the actual quality of the experience is pretty similar between the two of us. And everyone else pales.

They are pretty good too.

I think we're better because we have a better footprint.

They are their footprint they had to be very long and narrow.

But the actual quality of the experience is pretty similar.

Between the two of us and everyone else pales.

Speaker 3: And, by the way, no comparison in Cripple Creek. Zero. Oh, yeah. Zero comparison in Cripple Creek. Yeah. Ameristar is very successful. It's gotten old. They need to refurbish it. It's not a bad property. And the next best property is a pile of debris. It's got the Caesar's name on it, but it was built by Isla Capri, who we used to jokingly refer to it as a pile of debris. If you think about when we first bought that property.

And the state and by the way no comparison in Cripple Creek Zero Zero comparison in Cripple Creek Yeah.

Aerostar is very successful it's gotten old they need to refurbish it it's not a bad property and the next best property as a pilot break. It says it's got the Caesars name on it but it is built by Isle of Capri, who we used to jokingly referred to it as a pilot debris and.

If you think about one when we first.

Bought that property that was my gosh down 2015, I think when we bought Bronco Billy's and that's when we first started looking at the expansion, but since that time and certainly since we've put a shovel on the ground there.

Speaker 4: gosh Dan 2015 I think when we brought capabilities and that's when we first started looking at the expansion but since that time and certainly since we put a shovel in the ground there the town of Colorado Springs has continued to grow pretty massively we always talk about there being a million people in our broader feeder market that's really Colorado Springs divide what am I missing Dan Woodland Park? Probably, but what it does include is all of the suburbs to the south of Denver so kind of castle rock and going to the south and if you were to try and drive from castle rock to Black Hawk on a Friday or Saturday the traffic is so bad that it will be quicker for you to make it to us instead and so you know that whole area is above and beyond the million people that we talk about and we will market to those people so I think there's room for I and we will grow the market I mean we we talked about Colorado Springs being an under market in-vert self is also an underserved market and so I don't think we'll have a negative impact on Monarch or Black Hawk at all I think

The town of Colorado Springs has continued to grow pretty massively we always talk about there being a million people on a broader feeder market, that's really Colorado Springs divide what am I missing and Woodland Park, Puebla Pueblo, but what it doesn't include is all of the suburbs to the south of Denver, So kind of castle rock and <unk>.

Going to the South and if you were to try and drive from castle rock to Blackhawk on a Friday or Saturday. The traffic is so bad that it will be quicker for you to make it to us in stack and so that whole area is above and beyond the 1 million people that we talk about and we will market to those people.

So I think there is room for I I, and we will grow the market I mean, we talked about Colorado Springs being an underserved market Denver itself is also an underserved market.

So I don't think we will have a negative impact on monarch or black Hawk at all I think we will grow the market and but it'll happen over time and $50 million is not an aggressive number on this property just don't expect it to get there overnight yeah, I'm, sorry, I might my point was only that the that the theatre markets a lot bigger than what it what it was.

Speaker 4: we will grow the market and but it'll happen over time and 50 million is not an aggressive number on this property just don't expect it to get there overnight yeah and sorry my point was only that the that the feeder markets a lot bigger than what it what it was four years ago when we started this whole process it was a limited table came limits he did that's right it's a bidding limits we're bidding

Four years ago. When we started this whole process. We also eliminated table Ken limits. He did that's right.

Betting limits they were bidding.

Speaker 3: Are we up to have her? Uh, we are, but we have a few more people in the queue. Alright, I'll try to be succinct. Go ahead.

Are we up to have her.

We are but we have a few more people in the queue alright, I'll try to basically saying go ahead.

Yeah.

Speaker 2: Next question, John DeCree with CBRE, please go ahead.

Next question John decree with CBRE. Please go ahead.

Speaker 9: Hi, this is Max Marsh on Fajon Decree. Congrats on the great quarter guys. Looking at the strong results out of Waukegan, I'm curious if you have any updated view on elevated marketing in that environment, whether you're still sticking to that elevated marketing or maybe you're seeing the ROI here and giving you an opportunity to back off.

Hi, This is Max Marsh on for John decree Congrats on the great quarter guys.

Looking at the strong results out of Waukegan and I'm curious if you have any updated view on elevated marketing.

In that environment, whether whether you're still sticking to that elevated marketing or maybe youre seeing the ROI here and giving you an opportunity to back off.

Speaker 4: Well, I mean, we're still being pretty aggressive with the free play. We were a little quiet with the advertising in October , and we're about to go back up. And a little bit of the experimentation is like, does advertising drive business at this location? Every market's a little different. And so we'll see. You know, we're still learning and

Well I mean, we're still.

Being pretty aggressive with the free play.

We were a little quiet with the advertising in October.

To go back up and it's a little bit of the experimentation is like does advertising drive business at this location every market's a little different.

And so we'll see.

We're still learning and.

Speaker 4: We are still spending, you know, between the free play.

We are still spending quite a.

Between the free play.

And the reboot of the advertising I mean, if you were to look at it on a quarterly basis, you wouldn't see it but on a behind the scenes we watch it week to week and it's like well what did we spend advertising this week, what where our revenues this week and you try to figure out.

Speaker 4: and the reboot of the advertising. I mean, if you were to look it on a quarterly basis, you wouldn't see it, but behind the scenes, we watch a week to week, and it's like, well, what did we spend advertising this week, what were our revenues this week, and you try to figure out? Do you target it differently? The new ads have a little different look and feel to them.

Did you do your targeted differently, the new edge have a little different look and feel to them and.

Speaker 3: We'll see. It's just part of fine-tuning. You should expect more of that throughout the fourth quarter, Max.

I will say Oh, it's just part of fine tuning you should expect more and more of that though throughout the fourth quarter Max.

Speaker 4: Okay, understood. Thank you. And then just one quick follow up on the opening of the Circa sportsbook. Any commentary on that? And if you're maybe seeing some elevated play on heavy sports days or any additional color there would be great. Thanks. It's clearly a positive. It's not a big positive, but it does bring people into the property.

Okay understood. Thank you and then just one quick follow up on the opening of the circa sports book.

Any commentary on that and if you're maybe seeing some elevated play on heavy sports days or any additional color there would be great. Thanks.

It's clearly a pause there was another big positive, but it does bring people into the property.

Speaker 4: Of course, from circus point of view, most of their revenue comes from the app, which is because they can access everybody in the state of Illinois. You can be down in East St. Louis in place of that with Circa. And so the five million a year, while the percentage of revenue with a floor of five million a year is based on millionaire. And so Hi.

Of course from surface point of view.

Most of their revenue comes from.

The App, which is because they can access everybody in the state of Illinois, you can be down in east St. Louis and place a bet with circa.

And so the $5 million a year, while the percentage of revenue with a floor of $5 million a year is based on.

Speaker 4: the state-wide ability to operate sports betting. And does it bring people into our property? Yes, it does, but it's not a huge number. And by the way, that's true in Las Vegas as well. I mean, the sports books have always been.

The state wide ability to operate sports betting.

And and does it bring people into our property, yes, it does but it's not a huge number and that's by the way that's true in Las Vegas, as well I mean, the sports books have always been.

Speaker 4: relatively modest amenity to the casino, except at Circa itself who made a big deal out of it. And in our permanent casino at American Place, we have a bigger sports book similar to what they have at Circa downtown.

Relatively modest amenity to the casino.

Accepted circuit itself, who made a big deal out of it.

In our permanent casino in American place, we have a bigger sports book similar to what they have at circa downtown.

Great I appreciate it guys congrats on a good quarter.

Okay. Thank you.

Speaker 4: By the way, the steakhouse will probably have a bigger impact because right now we don't have a fine dining amenity and all of our competition does.

The way the Steakhouse, we'll probably have a bigger impact because right.

Right now we don't have a fine dining.

<unk> in most of our all of our competition does.

Speaker 2: Next question comes from Ricardo Chinchilla with D ??ty Berg….Please go ahead.

Next question comes from Ricardo Chinchilla with Deutsche Bank. Please go ahead.

Speaker 10: Hey, guys, thank you so much for taking my question. I was wondering if you could comment a little bit on your leveraging expectation for the business. You know, what's like, let's say, the two-year target for you guys where you would feel comfortable with the balance sheet before moving to some of the other opportunities that you have talked to about in the call and that, you know, could provide, you know, strong returns on investment. Well, it's actually hard to...

Hey, guys. Thank you so much for taking my question I was wondering if you could comment a little bit on your.

Deleveraging expectation for the business you know what what's like La.

Let's say the two year target for you guys, where you would feel comfortable with the balance sheet before moving to some of the other opportunities that you have talked to about in the call and did you know could provide strong returns on investment.

Well, it's actually hard to.

A look at our leverage because is it kind of it the way we've been developing this we borrowed all the money in advance to build both American place in Germany, and so now we're about to open all of that and so if you were to look at trailing 12 month earnings compared to that it looks like.

Speaker 4: as kind of the way we've been developing this, we borrowed all the money up in advance to build both American Place and Chamonix. And so now we're about to open all that. And so if you were to look at, you know, trailing 12-month earnings compared to debt, it looks like we're over-levered. And if you look ahead and say, well, what are earnings likely to be, and say...

We are over Levered and if you look ahead and say well what our earnings likely would be in say 2025 versus our leverage we're probably under levered.

Speaker 4: 2025 versus our leverage. We're probably under lever

Speaker 4: And I think as we grow in our scale here, you won't see as big a swings on that. You know, our obligation to build the permanent American place will not be as big a.

I think as we grow in our scale here you won't see as biggest swings on that.

At our obligation to build the permanent American place will not be as bigger.

Jump because the company is bigger.

Speaker 4: because the company is bigger as we did last time, memory. When we went and left it, we built...

As we did last time memory when when we went in we built.

Speaker 4: what would it be? About $500 million worth of stuff on the backs of casinos that were doing $40 million of EBDIT. Now we're going to be doing, I'm taking American Place and Chaminade and comparing it to the traditional casinos. And if you look at now with Chaminade and the temporary and the other places and the sports books and you look at building the permanent American Place, we'll be less levered. And that's, by the way.

What would it be about $500 million worth of stuff.

On the backs of casinos that we're doing $40 million of D V D I T.

Now, we're going to be doing I've taken American place in Chamonix, and comparing it to the traditional casinos and if you look at.

Now with Germany, and the temporary and the other places in the sports books and you look at building the permanent American place will be less levered and that's by the way.

Speaker 4: Lewis and I have been doing this a long time and at Mirage Resorts when I got there it was pretty heavy. We levered, we had the Mirage, then we levered, we borrowed more money, built Treasure Island. It was successful. Then we borrowed more money, built Palazzo and Boeravache and they were successful.

Lewis and I've been doing this a long time and at Mirage resorts when I got there it was probably pretty heavily levered.

The Mirage then we Levered, we borrow more money built treasure island. It was successful then we borrow more money built Palazzo and both of US and they were successful and along the way we became an investment grade. It was the the industry's first investment grade company, but we grew our way into it and at Pinnacle, We did.

Speaker 4: And along the way we became an investment grade. It was the industry's first investment grade company, but we grew our way into it.

Speaker 4: And at pinnacle we did the same thing. I mean the properties we inherited at pinnacle were able to double their results.

The same thing I mean, the properties, we inherited at Pinnacle, we were able to double their results.

Speaker 4: just by being better managers. And then we built the labirs, and then we built the two properties in St. Louis. And each time we'd borrow the money, build something, get good returns on investment, and that would reduce the leverage.

Just by Big better managers and then we built Lebaron then we built the two properties in St. Louis and each time, we borrowed the money built something get good returns on investment and that would reduce the leverage and so when we get to this company.

Speaker 4: And so when we get to this company,

Speaker 4: eight, nine years ago. I mean, it was pretty leveraged and we've already reduced the leverage. And when this stuff, when Shemne gets open and so on, you know, if you do it right, it's a win-win. In other words,

Eight nine years ago, I mean, it was it was pretty levered and we've already reduced the leverage and when this stuff.

When Chamonix gets open and so on.

If you do it right. It's a win win in other words, you know shareholders are getting good returns employees are getting good growth opportunities, but bondholders also do well because you ended up getting upgraded you end up calling the bonds before their maturity and nobody loses and.

Speaker 4: you know, shareholders are getting good returns, employees are getting good growth opportunities, but bondholders also do well because you end up getting upgraded, you end up...

Speaker 4: calling the bonds before their maturity, and nobody loses. And I kind of try to.

And I kind of tried to.

I can't plan, it that way I legally I guess.

Speaker 4: I can't plan it that way. Legally, I guess, management and the board is only obligated to shareholders. But in my mind, we have all these constituencies, and the lenders are certainly a big part of that. And we've always taken care on every aspect.

Management and the board is only obligated to our shareholders, but in my mind, we have all these constituencies and the lenders are certainly a big part of that and we've always taken care.

Every aspect.

Speaker 3: I think what a lot of people forget sometimes is we borrowed a big chunk of this debt to build two properties, one that's already open in the temporary and one that's about to open in seven weeks in Colorado. And when you perform it in run rate for those properties depending on your estimates, you're probably between three and three and a half times.

I think what a lot of people forget sometimes as we borrowed a big chunk of this debt to build two properties. One that's already opened and the temporary and one that's about to open in seven weeks in Colorado.

And when you pro forma and run rate for those properties, depending on your estimates and you probably between three and three five times gross leverage.

Speaker 3: gross levered. So to Dan's point, it's actually a pretty manageable balance sheet. And so, you know, and then we'll have cash flows that all that generates that we can use to contribute towards funding the permanent casino in Waukegan. You know, there'll likely be some sort of incremental slug of debt there. But it's, you know, between now and then, you know, we've got a split rating between S&P and Moody's. I would expect the lower part of that equation to get upgraded just on the sheer fact that you've got an interest expense that's around $35 million a year and a company with pro forma for those two openings that's making, you know, three, four times that amount. So, you know, it's doing all the things that we

So to Dan's point, it's actually a pretty manageable balance sheet and so and then and then we'll have cash flow is that all that generates that we can use to contribute towards funding the permanent casino in waukegan.

There likely will be likely be any some sort of incremental slug of debt there, but it's.

Between now and then I you know, we've got a split rating between S&P and Moody's I would expect.

The lower part of that equation to get upgrade are just on the sheer fact that you've got interest expense, it's around $35 million a year and a company with pro forma for those two openings that's making.

Three four times that amount so.

It's doing all the things that we intended actually it's interesting to look at the nine month numbers, our EBITDA for nine months.

Speaker 4: Actually, it's interesting to look at the nine month numbers are EBDIT for nine months.

Speaker 4: exceeds our annual interest expense. And our debt during those nine months included all the money needed to finish Chamonix. So without Chamonix earning anything.

Seeds are annual interest expense and our debt during those nine months included all the money needed to finish Chamonix, so without Germany, earning anything.

Speaker 4: and with America Place just ramping up after opening in February .

And with.

America place just ramping up after opening in February.

Speaker 4: We still earned enough in the nine months to cover our annual interest expense.

We still earned enough in the nine months to cover our annual interest expense.

No.

Yeah.

Uh huh.

Speaker 3: Obviously we have leverage, but in some ways you look at how leverage are we really? We're not all that leverage. It gets into it. It's essentially fake leverage since it's for something that isn't yet in those trailing numbers.

Obviously, we have leverage but in some ways you look at it however that we really were not all that levered.

Intuit has essentially bake leverage since it's for something that isn't yet and those trailing numbers yeah. So yeah.

Got it. Thank you so much for taking my question.

Speaker 3: Thank you, thank you. I think we have time for one last question, Dan.

Yeah. Thank you. Thank you I think we have time for one last question yeah Yeah.

Speaker 2: We have a follow-up from Ryan Sigda with Craig Hallum. Please go ahead.

Have a follow up from Ryan <unk> with Craig Hallum. Please go ahead.

Speaker 5: Hey guys, just quickly, what sportsbooks you still have licenses for on your skins and then what should we expect for Q4 from a licensing line or avenue with the can put states of circa and into termination.

Hey, guys just quickly what's.

Which sports books, you still have licenses for on your skin and then what should we expect for Q4 from a license in line revenue with the puts and takes with third party I'm going to termination.

Speaker 5: Yes. So on a go forward basis, we have one skin in Illinois, one skin that's live in Indiana, and two skins that are live in Colorado. And the sum total of that is $8 million per year. What we have idle is we've got two skins idle in Indiana, one skin idle in Colorado. Any one-time impacts in Q4, Lewis? No. Thank you.

So on a go forward basis, we have one skin in Illinois, one skin that Clive in Indiana, and two skins that are alive and Colorado.

And the sum total of that is $8 million per year. What we have idle is we've got two skins idle in Indiana, one skin idle in Colorado.

Any onetime impacts in Q port Louis.

No.

Thank you.

Yeah, sorry.

Sorry, I know it gets a little confusing with all of that movement there.

I would like to turn the floor, the Illinois, one as far as Mohammad.

Speaker 4: I was going to say, the Illinois one is far more important than the others, and Circa knows that business better than anyone else, so we're pretty happy with what they're doing. We don't know what the results are, but we know that they are very good at promoting a sportsbook and good at operating it.

Oh, it was to say the Illinois, one is far more important than the others and and circuit knows that business better than anyone else. So we're pretty happy with.

What they are doing so.

We don't know what the results are but we know that they are very good at promoting a sports book and good operating it.

It's fun to watch.

Sure.

Speaker 4: And on that, I'd like to thank everybody for your.

And that I.

Thank you everybody for your <unk>.

Speaker 4: support and we'll get Chamonix open and next time we'll be talking about how it's been doing. So thank you very much. Thank you, guys.

Support and we will get Germany open and and next time, we'll be talking about how it's been doing so thank you very much.

Hey, guys.

Speaker 11: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation. Thank you for watching.

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

[music].