Q1 2025 Full House Resorts Inc Earnings Call
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Operator: Good afternoon, ladies and gentlemen, and welcome to the Full House Resorts first quarter 2025 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call, you require immediate assistance, Please press star zero for the operator.
Speaker Change: Good afternoon, ladies and gentlemen, and welcome to the full house resorts first quarter 2025 earnings call.
At this time all lines are in listen only mode.
Speaker Change: Following the presentation, we will conduct a question and answer session.
Speaker Change: If at any time during this call you require and you get the assistance.
Speaker Change: Please press star zero for the operator.
Operator: This call is being recorded on Thursday, May 8th of 2025.
Speaker Change: This call is being recorded on Thursday may eight 2020 fives.
Adam Campbell: I would now like to turn the conference over to Adam Campbell. Please go ahead. Thank you. Good afternoon.
Speaker Change: I would now like to turn the conference over to Adam Campbell. Please go ahead.
Speaker Change: Thank you good afternoon, welcome to our first 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.
Adam Campbell: Welcome to our first quarter earnings call. As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we're making under the safe harbor provision of federal 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.
Speaker Change: 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.
Adam Campbell: Lastly, we are broadcasting this conference call at FullHouseResorts.com, where you can find today's earnings release, as well as all other SEC filings.
Speaker Change: Last week, we are broadcasting this conference call at full house resorts Dot Com, where you can find today's earnings release as well as all other SEC filings and with that said, we're ready to go.
Adam Campbell: And with that said, we're ready to go. Good afternoon, everyone. We'll be quick with the comments today, and we'll go into Q&A relatively quickly. But we do have a lot of positive things to talk about this afternoon regarding the quarter, especially at our three biggest properties.
Speaker Change: Good afternoon, everyone will be quite close our comments today and we're well on our Q&A relatively quickly, but we do have a lot of positive things to talk about this afternoon regarding the quarter, especially at our three biggest properties at silver slipper, we have Angie <unk> trimmed their web as our new general manager there. If you recall she came to us.
Adam Campbell: At Silver Slipper, we have Angie Tribner-Webb as our new general manager there. If you recall, she came to us from Rising Star, where she did a great job in taking that property from essentially breakeven and earning pretty meaningful income out of that property for the last few years. We also have several new department heads that she's brought in over there as well. That team has found ways to grow our bottom line. Adjusted property EBITDA grew by 21% versus last year's first quarter. That's despite a small decline in property revenue. We think the bulk of those changes are occurring, and we believe that so far we have more than $2 million of annualized cost savings there.
Speaker Change: From rising star, where she did a great job in taking that property from essentially breakeven in earning a pretty meaningful income out of that property for the last few years.
Speaker Change:
Speaker Change: We also have several new department heads up she's brought in over there as well that team has found ways to grow our bottom line adjusted property EBITDA grew by 21% versus last year's first quarter. That's despite a small decline in property revenue. We think the bulk of those changes are occurring and we believe that so far we have more than $2 million of annualized cost savings there.
Adam Campbell: To put it in perspective, last year we did a little over $12 million of adjusted EBITDA at Silver Slipper, and we think this year we've got a very good shot of hitting the mid-teens.
Speaker Change: To put it into perspective last year, we did about 12 little over $12 million of adjusted EBITDA at silver Slipper and and we think this year, we've got a very good shot of hitting the mid teens.
Adam Campbell: At Chamonix and Bronco Billies, we also have a new general manager. Brandon Lenson is our new GM there. He previously ran some casinos for Bally's and Blackhawk. He's got his start as a gaming regulator, for what it's worth, up in Canada, so he knows that side too. And then he had several senior roles at marketing companies that specifically targeted the gaming industry. Brandon came to us late in the first quarter, so the first quarter results do not include much of his efforts yet. Revenue grew 34% in the first quarter, expenses grew at a similar pace, and so our EBITDA was still at a little bit of a loss, but sequentially we did improve versus the first, versus the fourth quarter of 2024.
Speaker Change: At comedy and Bronco Billy's, though we also have a new general manager Brandon one centers, our new GM there.
Speaker Change: He previously ran some casinos for bally's and Black Hawk.
Speaker Change: He's got its start as a gaming regulator for what it's worth up in Canada. So he knows that side too and then he had several senior roles at marketing companies.
Speaker Change: Companies that specifically targeted the gaming industry.
Speaker Change: Brendan came to US late in the first quarter. So the first quarter results do not include much of his efforts yet revenue grew 34% in the first quarter expenses grew at a similar pace and so our EBITDA, we're still at a little bit of a loss, but sequentially, we did improve versus the first versus the fourth quarter of <unk>.
Adam Campbell: Now we're in a phase where we can focus on continuing to grow to grow the business, while also improving the bottom line. The revenue growth piece is simple to state, but as you guys know, it always takes time.
Speaker Change: 24.
Speaker Change: Now we're in a phase where we can focus on continuing to grow to grow the business. While also improving the bottom line. The revenue growth piece of simple the state, but as you guys know it always takes time, we built a beautiful building with unparalleled amenities in our market and we intend to use that to bring our customers a channel that has historically never visited.
Adam Campbell: We built a beautiful building with unparalleled amenities in our market, and we intend to use that to bring a customer to town that has historically never visited. If you ever wanted proof that we're in a very under-saturated market, all you need to do is look at the market's gaming revenue. We have more than doubled our gaming market share without any meaningful impact at all to the other gaming operators.
Speaker Change: Have you ever wanted proof that we're in a very under saturated market. All you need to do is look at the markets gaming revenue, we have more than doubled our gaming market share without any meaningful impact at all the other gaming operators on the cost side. We've already found several million dollars of cost to take out of the system on an annualized basis. They include over one and a half million dollars.
Adam Campbell: On the cost side, we've already found several million dollars of cost to take out of the system on an annualized basis. They include over one and a half million dollars of annual savings in the food and beverage department, a new overtime approval process that has eliminated more than 90 percent of our overtime costs. That adds up to more than $800,000 per year and about $350,000 of annual savings by using our own team to replenish the minibars in the rooms. On the slot side, we've found another $300,000 of savings as well simply by switching from revenue share to flat daily fee economics for some of the lease games that we don't own in the building.
Speaker Change: Annual savings in the food and beverage Department, a new overtime approval process that has eliminated more than 90% of our overtime costs that adds up to more than $800000 per year and about $350000 of annual savings by using our own team to replenish the many bars in the rooms.
Speaker Change: On the slot side, we've found another $300000 of savings as well simply by switching from revenue shared a flat daily fee economics for some of the lease games that we don't own in the building.
Adam Campbell: On the marketing side, we've also improved, especially on the targeting of our marketing and especially on our various social channels. That should let us be more efficient but also allow us to continue to grow the top line.
Speaker Change: On the marketing side, we've also improved especially on the targeting of our of our marketing and especially on our various social channels.
Speaker Change: Let us be more efficient, but also allow us to continue to grow the topline our new VP of advertising started here a few months ago and literally we have a brand new CMO that we signed yesterday he'll be starting next week to help further improve our marketing starting first with harmony.
Adam Campbell: A new VP of Advertising started here a few months ago, and literally, we have a brand new CMO that we signed yesterday. He'll be starting next week to help further improve our marketing, starting first with Chamonix. That new CMO came to us via Isle of Capri. He was the VP of Marketing there for a while, left the industry for a brief moment of time, and then most recently was Head of Marketing for a very large Indian casino in Southern California.
Speaker Change: That new CMO came to us via Isle of Capri was the VP of marketing there for a while but left the industry for a brief moment of time and then most recently was head of marketing for a very large Indian casino in southern California.
Adam Campbell: At American Place, we've consistently had year-over-year growth. That continued here in the first quarter where we had an all-time record gaming revenue month in March. We crossed $10 million for the first time, almost reached $11 million. Most of you probably saw April's gaming revenues yesterday. We did well despite having a low hold for the month of April.
Speaker Change: At American place, we are actually we've never had a.
Speaker Change: I'll flip it around that American place, we've consistently had year over year growth that continued here in the first quarter, where we had an all time record gaming revenue month in March we cross $10 million for the first time almost reached $11 million. Most of you probably saw April's gaming revenues yesterday, we did well.
Speaker Change: Despite having a low hold for for the month of April.
Adam Campbell: We crossed 100,000 guests in our database for the first time at American Place. The pace of new names going into the database has not really slowed down in recent months. That's a good sign because it strongly suggests that we aren't done growing in our temporary casino quite yet.
Speaker Change: We crossed 100000 guests in our database for the first time in American place the pace of new game of new names going into the database has not really slowed down in recent months. That's a good sign because it strongly suggest that we arent done growing and our temporary casino quite yet.
Adam Campbell: Two other quick notes, we completed the sale of Stockman's on April 1st, so we no longer have any relation to that property. And then on the balance sheet side, we did extend the maturity date of our revolver from March of 2026 to January of 2027. We also started voluntarily paying down some of that revolver balance with our excess cash, having recently taken the balance down to $25 million.
Speaker Change: Other quick notes, we completed the sale of Stockman's on April 1st So we no longer have any relation to that property and then on the balance sheet side. We did extend the maturity date of our revolver from March of 'twenty 'twenty six to January of 2027, we also started voluntarily paying down some of that revolver balance by their excess cash having recently taken the balance.
Speaker Change: Down to 25 million box I'm, sorry, I forgot the Dan you want to clean up in there.
Daniel Lee: I'm sure I forgot something, Dan, you want to clean up in there? I just mentioned that we are going to open a poker room here in the next couple of months in Illinois. We didn't have one, we're adding one. So when you say the temporary is not done growing, that's part of it. And you mentioned marketing, you know, in the casino world, marketing has changed pretty dramatically in the last several years. You still have casino hosts dealing with the highest end people and you still have sales and marketing people trying to book groups and conventions and so on.
Speaker Change: Just mentioned, we're going to open a poker room here in the next couple of months in Illinois.
Speaker Change: We didn't have one.
Speaker Change: We're adding one.
Speaker Change: So when you say the temporary is not done growing that that's part of it.
Speaker Change: And you mentioned marketing.
Speaker Change: You know in the casino World marketing has changed pretty dramatically in the last several years it's used.
Speaker Change: You still have casino hosts dealing with the highest end people and you still have sales and marketing people are trying to book groups and conventions and so on but a lot of it is database marketing dealing with the database and then.
Daniel Lee: But a lot of it is database marketing, dealing with the database and trying to figure out hired a chief marketing officer for the company, somebody who we think knows that stuff and can help us be more savvy and that that's going to be particularly important in Colorado where we have a great property and our revenues are not where they should be. I guess that's the main thing.
Speaker Change: Trying to figure out how to.
Speaker Change: Markets them with free play offers and all that sort of thing and we were probably behind the curve on that versus some other casino companies and so we've reached out and.
Speaker Change: <unk> hired a chief marketing officer for the company somebody who we think knows that stuff and kind of help us be more savvy and that that's going to be particularly important in Colorado, where we have a great property and our revenues are not where they should be.
Speaker Change: I guess, that's the main thing I mean, there's a lot of management changes and I think that's one of the things that really say, we've significantly upgraded the operating management of this company in the last year.
Daniel Lee: I mean, it's a lot of management changes, and I think that's one of the things I'd really say. We've significantly upgraded the operating management of this company in the last year compared to where it was. I mean, not that it was bad, but I think we're much better now.
Speaker Change: Compared to where it was not that it was bad but I think we're much better now.
Speaker Change: <unk>.
Daniel Lee: That's it.
Adam Campbell: I'm happy to take questions.
Speaker Change: So happy to take questions.
Speaker Change: Okay.
Operator: Thank you.
Operator: Ladies and gentlemen, we will now begin the question and answer session. Should he have a question? please press star one on your touchtone phone. you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star 2. If you're using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: So do you have a question.
Speaker Change: Please press star one on your Touchtone phone.
Speaker Change: You'll hear a prompt that your hand has been erased.
Speaker Change: Should you wish to decline from the polling process. Please press star two.
Speaker Change: If you are using a speaker phone please lift the handset before pressing illnesses.
Speaker Change: One moment. Please for your first question.
Speaker Change: Yeah.
Jordan Bender: Your first question comes from Jordan Bender of Citizens. Your line is already open. Hi, everyone. Good afternoon. You know, it seems like you're making good progress across multiple properties in the portfolio. I want to start in Colorado. You know, we're starting to head into, I guess, the busy season, you know, on the mountain. And I guess, can we kind of get a glimpse of what April and May look like there? And in terms of, you know, you lost money there in the quarter, just kind of what that looks like as well from an expense standpoint as we head into Q2.
Speaker Change: Your first question comes from Jordan <unk>.
Speaker Change: Under upset isn't your.
Speaker Change: Your line is already open.
Speaker Change: Hey, everyone. Good afternoon it.
Speaker Change: It seems like Youre, making good progress across multiple properties in the portfolio I want to start in Colorado, you know, where we're starting to head into the busy season.
Speaker Change: You know on the mountain and I guess should we kind of get a glimpse of what April and May look like there and in terms of.
Speaker Change: Yeah. He lost money there in the quarter, just kind of what that looks like as well from an expense standpoint, as we head into Q2. Thank you.
Daniel Lee: Thank you. Well, the seasonally, Q2 is quite a bit better than Q1. And I think it will be making money in the second quarter, whereas it lost a little bit of money in the first quarter. But there's two things involved in that. One is we hope to continue to grow revenues. I'm old, and I was part of the team that opened Bellagio and Treasure Island and Monte Carlo. There were some birthing pains with each of those two, and 25 years later, they're all known to be solid successes, and that will be true here, too. It's a great property and a great market, and it will be an upward trend from here.
Speaker Change: Well the seasonally Q2 is quite a bit better in Q1, and I think it will we'll be making money in the second quarter.
Speaker Change: Whereas it lost a little bit of money in the first quarter.
Speaker Change: But there's two things involved in that one is we hope to continue to grow revenues, we've had great revenue growth since Germany opened.
Speaker Change: We think that will continue as it matures, but on the expense side. We found a lot of low hanging fruit I mean are those of you who have known me I don't I'm not quick to make management changes I tend to back the people and try to help them evolve.
Speaker Change: But in this case became obvious where it makes some wholesale changes and we have.
Speaker Change: And there is a some things like that they were operating a pop up but say facility that was really supposed to be just for the opening because we didn't have 980 prime done yet, but they ran it throughout the year and we lost like a million and half dollars on it which is ridiculous.
Speaker Change: We have a deal with the laundry company, where we pay by the pound, but they're supposed to be a true up tonnage.
Speaker Change: Each month or quarter, I think as each quarter and nobody had done the true up and that was several hundred thousand dollars and Louis mentioned a few other things so having a fresh set of eyes. We also hired an outside consultant we enlisted the help from our GM and in Chicago, we descended on the property frankly.
Speaker Change: 103 people in about 10 minutes, and we took over and we found all sorts of <expletive>, we had chefs selling boxes of crab meat to other restaurants are and and so on and so we have cleaned it up and.
Speaker Change: Kind of ruthlessly Ah and we will continue to find ways to reduce cost and improve revenues.
Speaker Change: And I think it will be profitable in the second quarter, I think it'll be more profitable in the third quarter and show a profit for the year and grow from there.
Speaker Change: You know people forget them.
Speaker Change: I'm old and I was part of the team that opened Bellagio with treasure Island at Monte Carlo.
Speaker Change: There were some birthing pains with each of those two and 25 years later, they're all known to be.
Speaker Change: Solid successes and that will be true here too its a great property in a great market.
Speaker Change: And and it will be.
Speaker Change: Ah Ah upward.
Speaker Change: Upward trend from here.
Speaker Change: Even.
Speaker Change: A couple of years ago at about this time, we were talking about how difficult that was to hire people in Chicago and to get them into the gaming licensing and we had our challenges there too and then once we got it under control it's Ben.
Speaker Change: Up every quarter.
Speaker Change: Such that the first open so it'll be the same here and then.
Speaker Change: We didn't we didn't touch much on because I knew the question would come up but I'll go ahead and answer the question.
Yeah, you know we have right now are.
Speaker Change: Working on the design very diligently for building the permanent American place and we have a top architectural firm by the name of W. E. T. J, we have some other most talented people working on this they did all the work for the Venetian and Palazzo in a number of other places in south.
Speaker Change: Probably the largest architectural firm that only deals with hospitality they do hotels, all over the world, but a number of casinos and.
Speaker Change: And then frankly, we went to town studying.
Speaker Change: Ranco station.
Speaker Change: In fact, I spent so much time on the back of the house. They started to think at work there.
Speaker Change: And Oh, and they did a lot of smart things, there and and we've kind of learned from that and incorporated that.
Speaker Change: Into the design of the permanent American place, we hope to break ground, we intend to break ground in the second half of this year, maybe even late in the third quarter.
Speaker Change: And along those lines.
Speaker Change: Unlisted Richardson and company Bill Richardson and I were.
Speaker Change: I was at Mirage resorts, he was and they want.
Speaker Change: One of the major owners of a company called cold striking.
Speaker Change: And we did the joint venture for what is today Park, MGM, which may be the most successful.
Speaker Change: <unk> of our most successful resort on the entire Las Vegas strip and.
Speaker Change: It's been very very successful and he was the guy who built it they had a construction background and then it became a win win Circus Circus acquired Goldstrike. He became one of the bigger shareholders of Circus Circus and had a construction. So he built the expansion of our luxury built Mandalay Bay Edwin.
Speaker Change: They got sold to MGM. He started a construction company that by the way built Durango station built some angle.
Speaker Change: First the Phantom Blue built the West. Our addition of the Convention center built the sphere, maybe the largest construction company in Las Vegas today, his partner and that is of Atlanta.
Speaker Change: Many of you May know Allison I know, that's his wife, she's a very covenant lawyer.
And they they qualify as at WPZ and <unk> and we've been listed them to be like a project manager for us in Chicago. So it's important that the contractor be local because they will know the trades in the subs and all that.
Speaker Change: But construct there's not a lot being built in Las Vegas. These days. So so bill had some extra expertise that he's going to Oh.
Speaker Change: It gives to US obviously, we pay for it to help make sure that the project run smoothly.
Speaker Change: And so we're lining up the construction expertise to make it a very smooth.
Speaker Change: Project, and we will need to raise some money for it sometime in the next year I mean, we can do the early stages out of cash flow.
Speaker Change: We're watching the bond market pretty carefully because that's where we intend to go.
Speaker Change: Everything was doing great until we started talking about tariffs and then all hell broke loose.
Speaker Change: Hopefully, we will get back to a more normal market.
Speaker Change: But we have quite a bit of time to figure that out and.
Speaker Change: Multiple ways to finance it and.
Speaker Change: And so that's that's where we're going with that so.
Adam Campbell: You got more than what you bargained for there, Jordan, but I'm going to add a little bit to Dan. If you look at the bond markets, I will say this, the bond markets today versus what you saw back in early April after the tariffs were announced, that market has really come roaring back in a big way. It's really right now open for bigger companies, not quite us yet. But if you look at just kind of spreads in general and recent deals that have priced and go through the list of things, that's off to a promising start.
Speaker Change: You got more than what you bargained for their Jordan, but I'm going to add a little bit to Dan. When if you look at the bond markets I will say this the bond markets today versus what you saw back in early April after the tariffs were announced.
Speaker Change: That market has really come roaring back in a big way, it's really right now open for bigger companies not quite us yet, but if you look at just kind of spreads in general and recent deals that are priced and go through the list of things that that's off to a promising start so I look I don't know when the market will be opened for us the reality.
Adam Campbell: So look, I don't know when the market will be open for us. The reality is, as Dan said, we can go well into 2026 before we need to be out in the debt market. So we don't need to be on those debt markets today. But I think the reality is, I think the markets are going to open up sooner than what I would have told you three weeks ago.
Speaker Change: As Dan said, we can go well into 2026 before we need to be out in the debt markets. So we don't need to be on those debt markets today, but I think the reality is I think the markets are going to open up sooner than what I would've told you three weeks ago and I will also tell you the.
Daniel Lee: And I will also tell you, technically, we do not have a date by which we must open the permanent. The way the law is written in Illinois, there is an outside date at which we can operate the temporary. And that outside date is April of 2027. So we would like to open the permanent by August of 2027 because we have 600 employees and we want to transition them very smoothly over. We probably spent $5 or $10 million hiring and training those employees. And if we ended up opening, let's say in October 2027, we'd end up paying a bunch of employees for not working.
Speaker Change: Technically we do not have a date by which we must open the permanent.
Speaker Change: So the way the law is written in Illinois, There is an outside date at which we can operate the temporary and that outside date is April of 2027.
Speaker Change: So we would like to open the permanent.
Speaker Change: Not a decline because we would like to open the permanent by August of 2027, because we have 600 employees and we want to transition them very smoothly over we probably spent five or $10 million hiring and training those employees.
Speaker Change: And if we ended up opening let's say in October 2027, we'd end up paying a bunch of employees for not working and if we were a bigger delay from that you might be faced with laying people off and trying to hire them back later, which we'd rather not to no I think if we had to we could go to the legislature and get the law.
Daniel Lee: And if we were a bigger delay than that, you might be faced with laying people off and trying to hire them back later, which we'd rather not do. Now, I think if we had to, we could go to the legislature and get the law changed. We already did that once because of the Pottawatomie lawsuit. We pay over $20 million a year of gaming taxes and, of course, we employ a lot of people. And so nobody wants us to have a gap between the temporary and the permanent. And as long as we work diligently, we should be able to build this inside of two years.
Speaker Change: We already did that once because the part of army lawsuit, we pay over $20 million a year of gaming taxes and of course, we employ a lot of people and so nobody wants us to have a gap between the temporary and permanent.
Speaker Change: And as long as we work diligently we should be able to build this inside of two years. That's about the time frame that patent is spending to build the their place in Aurora, that's about how long it took the seminars to build their place in Rockford are places similar in size and scale to those.
Daniel Lee: That's about the time frame that Penn is spending to build their place in Aurora. It's about how long it took the Seminoles to build their place in Rockford. Our place is similar in size and scale to those. And so that's where we're going.
Speaker Change: And so that's that's where we're going but.
Daniel Lee: But back when the bond market fell apart when tariffs were first mentioned, I started thinking, okay, what do I do if I can't get the money in the next 18 months? And the answer is you go back to the legislature and get the law changed. And you just run the company as is. And we would actually generate more cash flow and have to borrow less so that it wouldn't be the worst thing in the world. And then in terms of, like, construction price, you know, when you look at the whole budget, which is $325 million, it basically breaks into thirds.
Speaker Change: Back when the bond market.
Speaker Change: Fell apart when terrorists or first mentioned.
Speaker Change: We're thinking okay, what do I do if I can't get the money in the next 18 months and the answer is you can go back to the legislature and get the law changed and you just run the company.
Speaker Change: As is and we would actually generate more cash flow and have to borrow less so there's that.
Speaker Change: It wouldn't be the worst thing in the world.
Speaker Change: And and then in terms of like construction price you know what when you. When you look at the whole budget, which is $325 million, but basically breaks into thirds about a third of that a little less than a third of it is soft costs things like capitalized interests in <unk>.
Daniel Lee: About a third of that, a little less than a third of it, is soft costs, things like capitalized interests and design fees and that sort of thing. About a third of it is actual material, and that's where like the price of steel comes into play. But steel is a relatively small part of the overall price of material. I mean, there's a lot of concrete in the building, for example, and electrical wiring and stuff like that. And, you know, one of the things about tariffs is like, well, just like Apple said, they're importing iPhones now from India, as many as they can.
Speaker Change: <unk> fees and that sort of thing about a third of it is actual material and that's where like the price of steel comes into play.
Speaker Change: But steel is a relatively small part of the overall price material I mean, there's a lot of concrete in the building for example in electrical wiring and stuff like that.
Speaker Change: And one of the things about.
Speaker Change: Tariffs as well just like Apple said, there, they're importing iphones now from India as many as they kept well a bet. If you live in India, and you buy an iPhone youre going to get one from China and so there are lot of sorts of ways around this if you don't want to pay a 145% tariff out of China, well those funds go to India, and then we get funds from Uh Huh.
Daniel Lee: Well, I'll bet if you live in India and you buy an iPhone, you're going to get one from China. And so there are all sorts of ways around this. If you don't want to pay 145% tariff out of China, well, those phones go to India and then we get phones from India. Or somebody goes down to Mar-a-Lago, kisses the ring, and then they decide that, oh, iPhones don't have to pay tariffs, which is what they did do. And so we're kind of watching this. But the price of steel is, that's the one thing that clearly jumped and that jumped as soon as they put a tariff on foreign steel.
Speaker Change: India.
Speaker Change: Or somebody goes down to Merrell logo kisses the ring and then they decided that Oh iphones don't have to pay tariffs, which is what they did do.
Speaker Change: And so we're kind of watching this.
Speaker Change: But the price of steel is that's the one thing that clearly jumped jumped as soon as they put a tariff on foreign steel.
Daniel Lee: And that's a relatively modest part of the project. The other third is the labor, all the electricians and carpenters and so on that it takes to actually build this. And while it's a union job, so the wages are somewhat set, nevertheless, you will get better efficiency in a recession than you would normally. And so the subcontractors will be a little hungrier if there's less being built. And so if all this tumult results in a recession, we may benefit from that more in the cost of construction than it would impact us in our normal operations. We operate these regional casinos.
Speaker Change: And that's a relatively modest part of the project. The other third is the labor all the electricians and carpenters and so on that it takes to actually build this in a while that it's a union jobs. So the wages are somewhat set.
Speaker Change: Nevertheless, you will get better.
Speaker Change: Efficiency in a recession than you would normally.
Speaker Change: And so the subcontractors would be a little hungry or if there's less being built and so.
Speaker Change: If all this tumult results in a recession.
Speaker Change: That we we may benefit from that more in the cost of construction then it would impact us in our normal operations. We operate these regional casinos, where a cheap vacation and so when you hit a recession people might be hesitant to come to Las Vegas, certainly Canadians are hesitant to come to Las Vegas, we don't.
Daniel Lee: We're a cheap vacation. And so when you hit a recession, people might be hesitant to come to Las Vegas. Certainly, Canadians are hesitant to come to Las Vegas. We don't get any Canadians in our places. And the dollar is down, so it's about 10% more expensive to go to Europe now than it was four months ago. And so if people stay home and do domestic vacations instead of going to Europe, that would benefit us. And so I think we're in pretty good shape relative to the tumult that's going out there in the world. I mean, would I prefer that everything be stable?
Speaker Change: Canadians and our places.
Speaker Change: And the dollar is down so it's about.
Speaker Change: About 10% more expensive to go to Europe now than it was four months ago.
Speaker Change: So if people stay home and do domestic vacations instead of going to Europe.
Speaker Change: That would benefit us.
Speaker Change: So I think we're in pretty good shape relative to the tumult, that's going out there in the world.
Speaker Change: Prefer that everything would be stable of course I would.
Daniel Lee: Of course, I would. But when you look at the choppy terrain, I think we're in pretty good shape for it. So I'm sorry. You answered a simple question. We gave you a 15-minute answer.
Speaker Change: But when you look at the choppy terrain I think we're in pretty good shape for it.
Jordan: I'm sorry, you asked a simple question. We gave you a 15 minute answer. So my goal Jordan was to leave things for people to ask questions about but Dan took it all with you.
Adam Campbell: My goal, Jordan, was to leave things for people to ask questions about, but Dan took it all with you. I think he answered everyone's question in the process.
Jordan: Hi, Thank you you answered everyones question and the profit for the year for the interest of time I'll leave it at that thanks for all the comments guys. Thank you Jordan.
Adam Campbell: So for the interest of time, I'll leave it at that. Thanks for all the comments, guys.
John Decree: Your next question comes from John DeCree of CBRE. Your line is already open.
Speaker Change: Your next question comes from John Decree of CBRE.
Speaker Change: Your line is already open.
Max Marsh: Hey guys, this is Max Marsh on for John. Thanks for taking the question. Obviously, you guys just finished the sale of Stockman's three biggest properties in a better position now. Strategically, how are you thinking about the rest of the portfolio at this time? Well, you got the three big properties. I sometimes refer to us as a three-legged stool, which is Mississippi, Chicago, and Colorado. The casino in Tahoe is... always been on a short string. Hyatt won't do a long-term lease for something like that, but we've operated it now for almost 15 years, so it keeps extending.
Speaker Change: Hey, guys. This is Max Marsh on for John Thanks for taking the question.
Speaker Change: Obviously you guys. Just finished the sale of stockman's three biggest properties in a better position now strategically how are you thinking about the rest of the portfolio at this time.
Speaker Change: Well you got the three big properties I, sometimes refer to us as a three legged stool, which is Mississippi Chicago in Colorado.
Speaker Change: The casino in Tahoe is.
Speaker Change: Always been on a short string Hyatt won't do a long term lease for something like that but we've operated it now for almost 15 years. So it keeps extending we have good relationship with them the owner, which is Larry Ellison is now finished and the place up we hope to continue there.
Daniel Lee: We have a good relationship with them. The owner, which is Larry Ellison, is now fixing the place up. We hope to continue there. We make good money there, and we have a good relationship with Hyatt. And as they fix up the place, we think it only gets better. If you were to try to sell it, you wouldn't get much for it because it's a short-term lease. But it's a nice business for us, and we're happy to have it.
Speaker Change: We make good money there and we have good relationship with Hyatt and as they fix up the place we think it only gets better.
Speaker Change: If you were to try to sell it you wouldn't get much for it because it's a.
Speaker Change: Short term lease.
Speaker Change: But it but it's a nice business for us and we're happy to have it.
Daniel Lee: And then the only other significant asset is Rising Star. A tough market. It was the first casino in the region. It made a lot of money in the early days, but since then, newer casinos have opened every direction from it. So our strategy there is to try to sell it in Indiana, and at the lowest revenue level, you pay the least gaming tax. Well, there used to be three casinos in that level, us and two places up in Gary that were old traditional riverboats as well. And in the last five years, the state allowed those two to relocate, and one is right off the interstate in Gary, and it's now the number one casino in the state.
Speaker Change: And then the only other significant asset is rising star tough market. It was the first casino in the region made a lot of money in the early days, but since then Newark casinos have opened every direction from it. So our strategy there is to try to relocate it.
Speaker Change: There's a progressive tax rate in Indiana.
Speaker Change: And at the lowest revenue level, you paid the least gaming tax well there used to be three casinos in that level us and two places up and carry that were old traditional river boats as well and in the last five years. The state allowed those two to relocate and one is right off the Interstate.
Speaker Change: And Gary and it's now the number one casino in the state and the other relocated to Terre Haute, where Churchill opened about a year ago, and it's doing very well as well.
Daniel Lee: And the other relocated to Terre Haute, where Churchill opened about a year ago, and it's doing very well as well. So we went to the legislature and asked if we could relocate, and the legislature passed a bill which has either been signed by the governor or sitting on his desk, and we expect it to be signed, that calls for the Gaming Commission to have a study of what markets could you add casinos to that would be most beneficial to the state. And I will tell you right now, I'd be astounded if the study showed anything other than the two largest cities in the state, which is Indianapolis and Fort Wayne.
Speaker Change: So we went to the legislature and asked if we could.
Speaker Change: Locate.
Speaker Change: And the legislature passed a bill which is.
Either been signed by the governor or sitting on his desk and we expect it to beside that calls for the gaming Commission to have a study.
Speaker Change: Where.
Speaker Change: What markets could you add casinos to that would be most beneficial to the state.
Speaker Change: And I will tell you right now I'd be astounded, if the study showed anything other than the two largest cities in the state which is Indianapolis and.
Daniel Lee: By the way, it was signed, Dan. Okay, it was signed. Okay, so there's a $100,000 study by a third party that will be taken by year end. And I'm quite certain that study is going to say Indianapolis with 2 million people has no casino. And Fort Wayne with 600,000 people has no casino. Now Caesars has casinos, 32 casinos, each of which is 30 miles outside of Indianapolis. And then the church at one in Terre Haute is 50 miles outside of Indianapolis. And so of course, they don't want it to be Indianapolis. But the city of Indianapolis has some historic buildings in need of renovation.
Speaker Change: By the way it was signed yeah. Okay. It was that okay. So that theres a $100000 study by a third party that will be taken by year end and I'm quite certain that study is going to say Indianapolis with 2 million people has no casino in Fort Wayne with the <unk>.
Speaker Change: 600000 people has no casino.
Speaker Change: No Caesars has casinos 32 casinos each of which is 30 miles outside of Indianapolis and then the church at one in Terre Haute is 50 miles outside of Indianapolis.
Speaker Change: And so of course, they don't want it to be Indianapolis, but the city of Indianapolis says some historic buildings in need of renovation.
Daniel Lee: They'd be interested in having it. And so that'll be an interesting thing to play out. Caesars lobbied very hard to have this not happen and ended up changing it so it doesn't say specifically relocate. It says what's the biggest opportunities because they're trying to figure out how to make the opportunity theirs. They first tried to kill it and they weren't successful at that. At the end of the day, they're not going to want it in Indianapolis. And I'm hoping that they will become our ally and say, okay, let's go to Fort Wayne. But frankly, if we could go to Indianapolis, that'd be very interesting.
Speaker Change: I'd be interested in having them.
Speaker Change: And so that'll be an interesting thing to play out.
Speaker Change: Caesars lobbied very hard.
This has not happened and ended up changing it so it doesn't say specifically relocate it says what's the biggest opportunities because they are trying to figure out how to make the opportunity. There's they first tried to kill it and they weren't successful at that.
Speaker Change: At the end of the day, they're not going to want it in Indianapolis and I am hoping that they will become our ally and say, okay. Let's go to Fort Wayne.
Speaker Change: But frankly, if we could go to Indianapolis that'd be very interesting.
Daniel Lee: But we've been dealing with New Haven, which is a suburb of Fort Wayne that's interested in this. We think it's a great market. The people in Fort Wayne to gamble have to drive like an hour. And so this is a big opportunity for Fort Wayne and it would be for us and it would be for the state. And we think the study is going to show that. And then there will be an argument in the next year legislative session whether this is a new license or can it be a relocation of a license. Well, in the politics of Indiana, a relocation of a license is not an expansion of gaming and there are two precedents for it.
Speaker Change: But we've been dealing with new Haven, which is a suburb of Fort Wayne that's interested in this we think it's a great market.
Speaker Change: They're the people in Fort Wayne to Gamble have to drive like an hour.
Speaker Change: And so this is a big opportunity for Fort Wayne and it would be for us and it would be for the state and we think the study is going to show that and then there'll be an argument in the next year legislative session. Whether this is a new license or can it be a relocation of late.
Speaker Change: In the politics of Indiana, a relocation of a license is not an expansion of gaming and there are two precedent for it and so we will argue that we should be allowed to relocate even rising sun is in favor of it because we told them that we would pay them twice the taxes, we're paying them now we would just pay it from the casino and <unk>.
Daniel Lee: And so we will argue that we should be allowed to relocate. Even Rising Sun is in favor of it because we told them that we would pay them twice the taxes we're paying them now. We would just pay it from the casino in Fort Wayne. And we told their employees if they stick with us until the day we relocate, we will pay them one year's pay. And so even our own employees are rooting for us to relocate. And the economics of that new facility are strong enough that we're working on that. So like that, the economics of relocating Rising Sun far exceed what we could sell Rising Sun for.
Speaker Change: Fort Wayne.
Speaker Change: We told our employees if they stick with us until the day, we relocate we will pay them one year's pay.
Speaker Change: And so even our own employees are rooting for us to relocate.
Speaker Change: And the economics of that new facility are strong enough.
Speaker Change: But we're working on that so.
Speaker Change: So I would like.
Speaker Change: The economics of relocating rising Sun.
Speaker Change: Far exceed what we could sell rising sun for and so that's our strategy there.
Daniel Lee: And so that's our strategy there.
Daniel Lee: So we have the three-legged stool, we have Rising Sun, and we have Tahoe. And we're pretty busy. So the things are offered to us all the time to acquire. We're pretty picky because we think we have a pretty bright future just with what we have on our plate right now. So never say never. If somebody wants to sell us Seaton Palace at two times cash flow, we'd look at it, of course. But they're not likely to do that.
Speaker Change: So we have the three legged stool, we have rising sun and we have a tahoe and we're pretty busy so we.
Speaker Change: Things are offered to us all the time to acquire we're pretty picky, because we think we have a pretty bright future just with what we have on our plate right now.
Speaker Change: So never say never if somebody wants to sell us Caesars Palace at two times cash flow, we'd look at it of course, but they're not likely to do that so.
Speaker Change: Great. Thank you for that and if I could just ask a quick follow up here.
Max Marsh: And if I could just ask a quick follow up here, I'm curious about the trajectory of the sports wagering contract business. Obviously, a couple of those fell out in January. Any expectations around either replacing those or whether the outlook for the balance of those contracts might be at risk? Or how are you guys thinking about that?
Speaker Change: Curious about the trajectory of the sports wagering contract business, obviously, a couple of those.
Speaker Change: Fell out in January any expectations around either replacing those or whether the outlook for the balance of those contracts might be at risk or how are you guys thinking about that.
Daniel Lee: Well, that business has evolved to being dominated by DraftKings and FanDuel, and MGM's a strong third party. And there's a few other parties in it. Thankfully, Circa's one of those. Circa has kind of a niche here in town. One of the larger sportsbooks, it might be the largest sportsbook in town. And so they have a few states, like Illinois, where they're trying to be a niche player as well.
Speaker Change: Well that business has evolved to being dominated by draft kings and fragile.
Speaker Change: Mgm's strong third party.
Speaker Change: Few other parties and it thankfully circa is one of those circa has kind of a niche here in town. There one of the larger sports books that might be the largest sports book in town and.
Speaker Change: So they have a few states like Illinois, whether they are trying to be a niche player as well.
Daniel Lee: And that's by far our most important contract. So we have unused skins in Indiana and Colorado. Unlikely that we'll be able to do a joint venture with anybody on anywhere close to the terms of what we used to have. We obviously look for it all the time. But it's difficult. And in fact, DraftKings and FanDuel have come out this past year in different markets and tried to get online gaming approved. And even where it has to be done in conjunction with a brick and mortar, the brick and mortar have generally opposed it because it would be so dominated by a handful of firms that you don't have a large number of firms looking for licenses.
Speaker Change: And thats by far our most important contract.
Speaker Change: So we have unused skins in Indiana and Colorado.
Speaker Change: Unlikely that we'll be able to.
Speaker Change: Do a joint venture with anybody anywhere close to the terms of what we used to have.
Speaker Change: We obviously look forward all the time.
Speaker Change: But it's difficult.
Speaker Change: In effect.
Speaker Change: Draft Kings of fan dual hip came out this past year in different markets and tried to get online gaming approved.
Speaker Change: And even where it has to be done in conjunction with our brick and mortar the brick and mortar have generally opposed it.
Speaker Change: Because.
Speaker Change: It would be so dominated by a handful of firms that you don't have a large number of firms looking for licenses. So for example in Colorado.
Daniel Lee: So, for example, in Colorado, DraftKings and FanDuel already have their partnerships, so we don't think anybody would call us up and say, hey, we want to get into the Colorado market. We'll give you a piece of the deal.
Speaker Change: A draft Kings of Andrew will already have their partnerships. So we don't think anybody would call us up and say hey, we want to get into the Colorado market will give you a piece of the deal.
Daniel Lee: And in terms of us doing it ourselves, well, we're pretty busy these days. And those people who have tried to compete with DraftKings and FanDuel have found it's a lot of headwinds on that. MGM has done okay. They're big enough. But there's a number of other players who have kind of folded and just sold their businesses to DraftKings and FanDuel.
Speaker Change: And in terms of us doing it ourselves, but we're pretty busy these days and and.
Speaker Change: And those people who have tried to compete with draft kings of Pandora have found it.
Speaker Change: A lot of headwinds on that.
Speaker Change: MGM has done okay. They are big enough.
Speaker Change: But there is a number of other players who have kind of folded and just sold their businesses to draft. The Haynesville Fayetteville.
Speaker Change: Okay.
Max Marsh: Great. Thank you guys very much.
Speaker Change: Great. Thank you guys very much.
Ryan Sigdahl: Your next question comes from Ryan Sigdahl of Craig Hallam Capital Your line is already open. Hey, good afternoon, guys. Good to hear Shamanese, you expect to get to positive EBITDA in Q2 and for the year. Curious though, when when you think you can get to, say, 20 million plus of EBITDA, which ultimately you need to get to to cover the cost of capital. what you built and took on from a debt standpoint for the property. Well, you know, I'm still looking at being able to do much more than $20 million. And when we hired Brandon, I said, I'm thinking of a five-year time frame.
Speaker Change: Your next question comes from Ryan Sick Doll of Craig Hallum Capital Group.
Speaker Change: Your line is already open.
Speaker Change: Okay.
Speaker Change: Hey, good afternoon guys.
Speaker Change: Good day, how many you expect to get to positive EBITDA in Q2 and for the year curious, though when when do you think you can get to.
Speaker Change: $20 million plus of EBITDA, which ultimately you need to get to to cover the cost of capital to just what you built and took on from a debt standpoint are for the property.
Speaker Change: I'm still looking at.
Speaker Change: Being able to do much more than $20 million.
Speaker Change: No.
Speaker Change: When we hired Brandon.
Speaker Change: I'm, taking up a five year timeframe I'd like it to be well above $20 million by 2030.
Daniel Lee: I'd like it to be well above $20 million by 2030. Does it get to $20 million this year? No. Next year, maybe not, but it'll be headed that way. Three years out, we should be at $20 million. When you look at the magnitude of the property and what the facilities we have, and you look at Monarch, which is about 50 percent bigger than us, in other words, we're two-thirds of their size, and they're doing $100 million a year. And so if they can do $100 million a year, why can't we not do 50? Now, we're not going to get there overnight, but with a five-year time frame, that's possible.
Speaker Change: Does it get to $20 million this year next year.
Speaker Change: Maybe not but it would be headed that way.
Speaker Change: Three years out we should be at $20 million.
Speaker Change: When you look at the magnitude of the property in the.
Speaker Change: The facilities, we have and you look at.
Speaker Change: Monarch, which is about 50% bigger investment in other words, where two thirds of their size and theyre doing a $100 million a year and.
Speaker Change: So if they can do $100 million a year why can we not do 50, now we're not going to get there overnight, but with a five year timeframe that's possible.
Speaker Change: So.
Daniel Lee: I mean, a micro 10, 20, 30, 40, 50, I mean, if you want a rough guess, you could put that out for the next five years, okay. But you know, and I said, Brandon, when I hired him, I said, the trajectory is kind of more important. I mean, I want it to be trending positively, and nicely positively. And that's the same thing we have going on in Chicago, where we're trending positively. You know, I think the temporary casino will make something in the mid 30s this year, probably in the 40s next year, might hit 50 before we open the permanent.
Speaker Change: I mean it migrate.
Speaker Change: 10, 2030, 40, 50, I mean, if you want a rough guess.
Speaker Change: You can put that out for the next five years, but.
Speaker Change: And I said, Brandon when I hired him as the trajectory is kind of more important I mean, I want it to be trending positively and nicely positively and thats. The same thing we have going on in <unk>.
Speaker Change: Chicago.
Speaker Change: We're trending positively.
Speaker Change: I think the temporary casino will make something in the mid <unk>. This year, probably in the $40 next year.
Speaker Change: Might hit 50, before we open the permanent and the Permian is going to be a big jump in revenues after that and Theres a number of cases now where you can look at.
Daniel Lee: And the permanent is going to be a big jump in revenues after that. And there's a number of cases now where you can look at where a permanent casino replaced a temporary casino, and the permanent did twice the revenues. If you have a significantly better facility and recognize our permanent is about 200,000 square feet, it's just under 200,000 square feet. Now that's including back of house and everything. And that's roughly twice the size of the temporary. So just by socks. we can do better revenue, but also it's a higher quality, it's a much nicer place.
Speaker Change: We're a permanent casino replacement temporary casino and the permanent did twice the revenues.
Speaker Change: If you have a significantly better facility and recognize our permanent.
Speaker Change: That is about 200000 square feet is just under 200000 square feet now, that's including backup house and everything and that's roughly twice the size of the temporary so just by size. We can do better revenue, but also it's a higher quality, it's a much nicer place and.
Daniel Lee: And I recently went down and looked at the Treasure Chest Casino that Boyd opened in Jefferson Parish, it's a suburb of New Orleans. And typical of Boyd, they are so good at making the buffalo jump off a nickel. You go in and you look up at the ceiling and they have a grid in there for acoustic tiles and they didn't spend $10 a tile to put the tiles in, they just have a grid. I talked to one of their supervisors, we try not to look up. But it's doing much better than the crummy boat they operated there for 20 years.
Speaker Change: I recently went down and looked at the treasure chest casino that Boyd opened in.
Speaker Change: Jefferson parish.
Herb: Herb of New Orleans, and typical of Boyd.
Herb: They they they are so good at making the Buffalo jump off a nickel I mean, they you go in and you look up at the ceiling and they have a grid in there for acoustic titles and they didn't spend $10 a tire that put style fit and they just have a grid I talked to one of their supervisors, we try not to look up.
Herb: But it's doing much better than the crummy. Both the operated there for 20 years and it's the same market. It's the same people. It's the same location is doing twice the revenues frankly, if they had spent a little bit more and made it a little bit nicer they might be doing three times. The revenues of what they were doing in the old one when you pull up to it it looks.
Daniel Lee: And it's the same market, it's the same people, it's the same location, and it's doing twice the revenues. Frankly, if they'd spent a little bit more and made it a little bit nicer, they might be doing three times the revenues of what they were doing in the old one. When you pull up to it, it looks like they hired an architect from Costco. But they're doing very well, is my point. And I think if they had spent a little bit extra, they'd be doing even better, but that's not Boyd's DNA. They're a very successful company and they are in part successful by what they don't spend.
Herb: They hired an architect from Costco.
Herb: But they're doing very well is my point and I think if they had spent a little bit extra they'd be doing even better but thats not boyd's DNA.
Herb: They're a very successful company and they are in part successful buy what they don't spend.
Daniel Lee: And they did that at Treasure Chest. But that's, you have Treasure Chest, you have the Seminole Casino in Rockford, which is doing very, very well since they opened their permanent back at the end of August. You have a couple of places in Virginia now where permanents have replaced temporaries. If you go to our, you know, if you just look at the numbers, our temporary looks great. If you actually go and look at it, if you drive by during the day, it looks like where the Department of Motor Vehicles stores salt. It's a big sprung structure, has zero curb appeal.
Herb: And they did that a treasure chest, but that's you have treasure chest you have the similar casino in Rockford, which is doing very very well since they opened their permanent back in at the end of August.
Herb: A couple of places in Virginia now.
Herb: Permanent separate replace Temporaries, if you go to where if you just look at the numbers.
Herb: Our temporary looks great. If you actually go and look at it if you drive by during the day it looks like where the department of motor vehicles store Salt, It's a big sprung structure has zero curb appeal at night, we have these giant projectors that traded project stuff on it to make it look interesting but.
Daniel Lee: At night, we have these giant projectors that try to project stuff on it to make it look interesting. But once you go inside, it's pretty nice. We did spend the money to make it look like a real casino on the inside. But on the outside, I go there with Uber drivers all the time and they pull up this, what the heck is this? It's a casino. Really?
Herb: Once you go inside its pretty nice we did spend the money to make it look like a real casino on the inside but in the outset.
Herb: I go there with Uber drivers all the time and they pull up this what the heck is that it's a casino that really so you know our permanent will have curb appeal and that make a big difference.
Daniel Lee: So, you know, our permanent will have curb appeal and that might make a big difference.
Herb: Yes.
Daniel Lee: Very good.
Herb: Very good.
Daniel Lee: And just moving on to a lot of personnel changes, general managers. Curious, I guess, what gives you confidence? Because the previous ones also had good resumes, good backgrounds, good experience. etc, etc, etc. So I guess, what gives you confidence in the new leadership team at Silver Slipper and at Chamonix? Sure. John Ferrucci had run the Silver Slipper very well for many, many years. He was in his 70s. It was time to retire. And so he earned a good retirement. He's still a consultant to us for a year. Angie, he was Angie's mentor. And she worked in the accounting department at the Silver Slipper.
Speaker Change: Moving on to the lot of personnel changes general managers.
Speaker Change: Curious I guess, what gives you confidence because the previous ones also had good resumes good backgrounds, good experience et cetera, et cetera, et cetera. So I guess what gives you confidence.
Speaker Change: In a new leadership team at silver slipper and a comedy.
Speaker Change: Sure John Ferrucci had run the silver slipper very well for many many years. It was in the seventies. It was time to retire.
Speaker Change: And so he earned.
Speaker Change: A good retirement, he's still a consultant to us for a year.
Speaker Change: Angie.
Speaker Change: He was Andrew's mentor.
Speaker Change: She worked in the accounting department at the Silver Slipper. She grew up in East, Germany is very interesting background and.
Daniel Lee: She grew up in East Germany. It's a very interesting background. And was a foreign student over here and ended up living here. When we promoted her to finance director in Rising Sun, she did a good job. And then when the GM left, we made her the GM. And she pretty quickly doubled the income of the place in a tough market, despite new competitors. And so when John opted to retire, I thought, well, she's the obvious person to bring down there. And a lot of times, just a fresh set of eyes finds things. I mean, like we deal a lot with Hyatt.
Speaker Change: There was a foreign student over here and ended up living here.
Speaker Change: When we promoted her to finance director and rising Sun. She did good job and then when the GM left we made her the G M and sheet pretty quickly doubled the income.
Speaker Change: The place in a tough market, despite new competitors and so when when John opted to retire I thought well she's the obvious person to bring down there and a lot of times, just a fresh set of eyes.
Speaker Change: <unk> six I mean.
Speaker Change: We deal a lot with Hyatt Hyatt seems to have a strategy of moving their gms every three years or so which creates a lot of tumult.
Daniel Lee: Hyatt seems to have a strategy of moving their GMs every three years or so, which creates a lot of tumult, but it gives you a fresh set of eyes all the time. And it's actually... Not a crazy strategy. And so I think just having that fresh set of eyes will improve the stuff there. And then we had to replace Angie in Cincinnati, and Jeff Mitch, he used to work with Lewis and I at Pinnacle, and we knew he was a very competent guy. His wife is from the town next to Rising Sun, and her daughters are adults now and just had their first grandchildren.
Speaker Change: But it gives you a fresh set of eyes, all the time.
Speaker Change: And it's actually a.
Speaker Change: Not a not a crazy strategy.
Speaker Change: So I think just having that fresh set of eyes.
Speaker Change: Is it will improve the stuff there and then.
Speaker Change: We had to replace Angie.
Speaker Change: And Cincinnati, and Jeff Mitch who used to work with Lewis.
Speaker Change: Pinnacle and and.
Speaker Change: And we do is very catheter guy his wife as from the town next at rising Sun.
Speaker Change: <unk> and her daughters are adults now and just had their first first grandchildren.
Daniel Lee: And so Jeff had sent me an email a long time ago that he was working for the big Indian tribe down in Tucson, Arizona. He was commuting from Cincinnati because his wife wanted to be with her daughters and grandchildren, and if he ever had an opportunity, go back. And I was like, wow, this is an opportunity, because he's a very qualified guy, overqualified for Rising Sun, but the perfect guy to build out Fort Wayne. And so I reached out for him, his email had sat in my little file you put that I might need this someday.
Speaker Change: So Jeff had sent me an e-mail long time ago that he was.
Speaker Change: Working for the Big Indian tribe down in Tucson, Arizona. He was commuting from Cincinnati, because his wife wanted to be with her daughters and grandchildren, and if you ever had an opportunity to go back and I was like Wow. This is an opportunity because he is a very qualified guy overqualified for rising sun, but the perfect Guy to Buildout Fort.
Speaker Change: Wayne.
Speaker Change: So I reached out for them as email it sat in my.
Speaker Change: A little follow you put that I might need a sub debt. So when we moved to angi down I reached out for Jeff and that's how that works.
Daniel Lee: So when we moved Angie down, I reached out for Jeff, and that's how that worked. In Colorado, I realized after we opened that the guy we had running it was just in over his head, and it was just one thing after another, and he was deeply in over his head. six, eight months ago. I enlisted a headhunter, we interviewed all sorts of people, and then the more we got into it, the more in over their heads we found they were. And so we made wholesale changes and I'm confident it will do better. And in fact, the guy we hired, this consultant, who went up there for a week, kind of undercover.
Speaker Change: In <unk>.
Speaker Change: Colorado I realized after we opened that care, we had running it was just an oversight.
Speaker Change: And there's just one thing after another and he was deeply in over his head.
Speaker Change: And so.
Speaker Change: Six to eight months ago.
Speaker Change: Enlisted the head Hunter, we interviewed all sorts of people.
Speaker Change: Then.
Speaker Change: Before we get into it the more in over their heads to be found they were and so we made wholesale changes and I'm confident it will do better.
Speaker Change: The guy.
Speaker Change: Alright, this consultant, who went up there for a week kind of undercover stayed there as if he was a gambler and he looked around this is the guy who built up.
Daniel Lee: He stayed there as if he was a gambler and he looked around. This is the guy who built up... the San Manuel Tribe Casino in California. It's one of the most successful casinos in the country. And he now has a consulting practice, mostly for Indian tribes, of helping to figure out stuff like this. And he spent a week there undercover just taking notes. And then I called the property and said, I'm sending this consultant in to help us figure out how to get it better. And then he spent a week dealing with the management team, trying to learn what we could from it.
Speaker Change: The Sun Manuel tribe Casino in California, It's one of the most successful casinos in the country and he now has a consulting practice, mostly for Indian tribes that help them figure out stuff like this and he spent a week there under covered just taking notes and then I called the property instead I'm, sending this consultant in to help us figure it.
Speaker Change: How to get a better and then he spent a week dealing with the management team trying to learn what we heard from them.
Daniel Lee: And then I fired the management team and he helped us transition and helped us interview replacement people. But he said, look, this property has all sorts of opportunity and it's just mismanaged. And it's kind of funny, I've given the example a few times where when we built Bellagio, had we taken the management team from the Golden Nugget Laughlin and put them into Bellagio, they would have failed. And in effect, that's kind of what we did. We had the management team from the old Bronco Billy stepping into Chamonix and they didn't know what to do. But it's funny when I give that example, those in the know, the management team at the Golden Nugget Laughlin at the time was headed by Bill Hornbach.
Speaker Change: And then as far as the management team and he helped us transition and helped US interview replacement people, but he said look.
Speaker Change: Has all sorts of opportunity and it's just mismatch and it is kind of funny I've. Given the example of few times, where when we built <unk> had we taken the management team from the Golden Nugget, Laughlin and put them into philosophy that they would have failed in effect, that's kind of what we did with the management team from the old Bronco Billy's stepping into shop.
Speaker Change: Many and they didn't know what to do and but it's funny when I give that example.
Speaker Change: Those in the know the management team at the Golden Nugget last one at the time was headed by Bill Hornbuckle.
Daniel Lee: And he ended up leaving and joining MGM and, of course, working his way up in MGM and learned a lot. And today, he's a very competent CEO of MGM. But when I give that example, had we taken Bill Hornbuckle and put him in charge of Bellagio at that time, even Bill, as competent as he is, probably would have failed because he needed the experience that he gained in the last 20 years. And so the fault is on me. The team we had had never run a place like Chamonix, never opened a place like Chamonix. For example, they should have had a sales and marketing team two years ago.
Speaker Change: He ended up leaving or joining MGM and of course, working its way up and MGM and learned a lot and today. He's a very competent CEO of MGM, but when I gave that example had we taken bill hornbuckle and put him in charge of Palazzo at that time, even bill as competent as he is probably would've failed.
Speaker Change: Because we needed the experiences.
Speaker Change: That is gained in the last 20 years and so.
Speaker Change: The default is on me.
Speaker Change: The team we had did not had never run a place like Germany never opened a place like Germany. For example, they should've had a sales and marketing team two years ago, when Mary it builds a new hotel they hire our sales and marketing team when they break ground.
Daniel Lee: And when Marriott builds a new hotel, they hire a sales and marketing team when they break ground. We never really did. And so all of a sudden, we're open, and we have very little business on the books for this great meeting room space we had. And so it's like, once you finally realize it, it's like, OK, we have to do a restart. It's almost like turning your computer off and turning it back on. And that's what we've done.
Speaker Change: Never really did and so all of a sudden we're open and we have very little business on the books for this great meeting room space we have.
Speaker Change: And so it's like once you finally realize it it's like Okay. We have to do a restart it's almost like.
Speaker Change: Turning your computer off and turning it back on and that's what we've done.
Speaker Change: So.
Daniel Lee: Very good.
Daniel Lee: Thanks, guys.
Speaker Change: Very good thanks, guys. Good luck.
Operator: Good luck.
Speaker Change: Thanks.
Operator: Your next question comes from Chad Beynon of McCurry. Your line is already open. Hey guys, this is Sam on for Chad. Thanks for taking our question. Maybe just one from us. With margins at American Place approaching 30% almost. How should we think about that for the rest of the year, just given what you're seeing from current trends? Well, it's kind of funny. We were we've been playing with that a little bit, I think. You know, margins will stay roughly in that level, but the permanent will be higher. Because the permanent, first off, just economies of scale, doing more revenues per square foot, which the permanent will probably do, get you higher margins.
Speaker Change: Your next question comes from Chad Beynon.
Speaker Change: Corey.
Speaker Change: Your line is already open.
Speaker Change: Hey, guys. This is Sam on for Chad Thanks for taking our question.
Speaker Change: Maybe just one from us.
Speaker Change: Margins at American place approaching 30% almost.
Speaker Change: How should we think about that for the rest of the year, just given what youre seeing from current trends.
Speaker Change: Okay.
Speaker Change: Well, it's kind of funny, we've been playing with that a little bit I think.
Speaker Change: You know the margins will stay roughly in that level, but the permanent will be higher.
Speaker Change: Because the permanent first off just a fundament of scale doing more revenues per square foot, which the permanent we'll probably do get you higher margins offsetting that a little bit as you go up and revenues the tax rate gets higher.
Sam: Offsetting that a little bit is as you go up in revenues, the tax rate gets higher in Illinois. But the other thing is we're a little bit encumbered. That 30% margin is despite over 100,000 a month we pay to rent the kitchens, which are modular kitchens attached to the building. And then the offices are also in rented construction trailers. And when we go to the permanent, we save a couple million a year in rent, because parts of the temporary, big parts of the temporary facility are leased modular stuff, and in the permanent it won't be, it'll be part of the building costs.
Speaker Change: In Illinois.
Speaker Change: But the other thing is we're a little bit encumbered that 30% margin is despite over 100000, a month, we paid a rent the kitchens, which are modular kitchens attached to the building and then the offices are also rented construction trailers and when we go to the permanent we save a couple of million dollars a year in rent.
Speaker Change: Because because parts of the temporary big parts of a temporary facility are leased modular stuff and then the permanent it won't be it will be.
Speaker Change: Part of the building cost so I think the margins on the permanent will be in the mid <unk>.
Daniel Lee: So I think that margins on the permanent will be in the mid-30s, possibly even a little above the mid-30s. And that's not unusual for a... a high-grossing regional casino. And so anyway, I think you won't get much above 30 until we get the permanent open, but I think you'll get a nice lift when we get the permanent. We'll also have a better customer in the permanent building, which will also flow down pretty nicely to the bottom line. Yeah. Great. Thanks. Thanks for the color. Have a good second quarter. Thank you. We probably have time, we'll have the clock down, maybe one, possibly two more questions.
Speaker Change: Possibly even a little above mid thirties, and that's not unusual for a.
Speaker Change: Hi, grossing regional casino.
Speaker Change: <unk>.
Speaker Change: So.
Speaker Change: I think I think you won't get much above 30 until we get the permanent open, but I think you'll you'll get a nice lift when we get the permanent loss of a better customer and the permanent building, which.
Speaker Change: Which was a slow down pretty nicely to the bottom line.
Speaker Change: Great. Thanks.
Speaker Change: Thanks for the color and have a good second quarter.
Speaker Change: Thank you.
Speaker Change: Probably have time looked at the clock, maybe maybe one possibly two more questions. We stay here long enough nobody can go listen to Golden gaming.
Operator: If we stay here long enough, nobody can go listen to Golden Gaming. Oh, they're on it now, Daniel. But we actually do still have a lot of people. Let's take one. We don't have as much to talk about anyway. We're more fun. Let's take maybe one or two more. We'll see.
Speaker Change: There are no doubt.
Speaker Change: But we actually saw a lot of people, let's take let's take one everyone wants to talk about anyway were more fun.
Speaker Change: So, let's take maybe maybe one or two more we will see.
Operator: Okay, thank you.
Speaker Change: Okay.
Ricardo Chilla: Your next question comes from Ricardo Chilla of Deutsche Bank. Your line is already open. Hey, guys. Thank you so much for squeezing me in. I was just going to ask one quick one, given that you guys have given us so much great color. Since Liberation Day, have you guys seen any particular change in, you know, visitation frequency or, you know, spend per trip from some of your customers? Is there any difference between the high end or the low end of the database that it's worth noting? Thank you.
Speaker Change: Thank you. Your next question comes from Ricardo Chiller of Deutsche Bank.
Speaker Change: Your line is already open.
Speaker Change: Yes.
Speaker Change: Hey, guys. Thank you so much for squeezing me in I was just seemed to ask.
Speaker Change: One quick one given that you guys do you guys have given us so much great color.
Speaker Change: Liberation Day have you guys seen any particular change in you know visitation frequency or spend per trip from some of your customers is there any difference between the high end or the low end of the database that it's worth noting thank you.
Daniel Lee: Okay, actually before I say that, I gave a little dig there at Golden Gaming. Blake Sartini is a neighbor of mine. He's a really good guy. That's a little unfair. They're a good company. So going back on your question of liberation, not really, but I'm not sure we would. Just to walk you through a few things, like at the Silver Slipper, which is a market where nobody knew has been added to the market or anything, although there is a little positive thing. Churchill Downs, through the fairgrounds, operates a group of about 15 off-track betting parlors that, under Louisiana law for a while now, they've had video poker machines.
Speaker Change: Okay.
Speaker Change: I said I gave a little dig their golden gaming Blake <unk> neighborhood by neighborhood.
Speaker Change: Good Guy and so.
Speaker Change: That's a little unfair if they're a good company but.
Speaker Change: But.
Speaker Change: Sure going back on your question of Liberation.
Speaker Change: Not really but I'm not sure we would.
Speaker Change: You know just walk you through a few things like at the silver Slipper, which is a market where nobody knew as had been added to the market or anything although there is a little positive thing.
Speaker Change: Churchill Downs through the Fairgrounds operates a group of about 15 off track betting parlors that under Louisiana law for a while now they've had video poker machines I think it's 50 machines, if I recall and then they got a little law through that allowed them to have.
Daniel Lee: 50 machines if I recall. And then they got a little law through that allowed them to have historical racing machines, which is basically a slot machine. And for a while now, they've been operating slot machines in these little places that are scattered all over New Orleans. And And there's a lawsuit that came out of Slidell that went all the way to the Supreme Court. And those machines have now been ruled not legal. It's an expansion of gaming. And that would take a statewide referendum. So you couldn't just do it in the legislature. And so they have to remove their slot machines.
Speaker Change: <unk> historical racing machines, which is basically a slot machine.
Speaker Change: And for a while now they've been operating slot machines and these little places that are scattered all over in New Orleans.
Speaker Change: And there is a.
Speaker Change: Lawsuit that came out of Slidell.
Speaker Change: Debt.
Speaker Change: When all the way to the Supreme Court and those machines have now been rural not legal.
Speaker Change: So it's an expansion of gaming and that would take a state wide referendum and they didn't so you couldn't just do it in the legislature and so they have to remove.
Speaker Change: Their slot machine, it's not a huge plus for us, but it is a plus.
Daniel Lee: It's not a huge plus for us, but it is a plus. And it's not a huge negative for Churchill. They're a big company. But that's indicative of the little political fights that happen sometimes in the industry. So our results were down a little bit. The revenues were down a little. Our profit was up a lot. So you kind of wonder, well, is that a recession? And I think it was really a very rainy Mardi Gras. Mardi Gras is one of our busiest weekends. And this year, it kind of got rained out. And so I don't think it was a recession.
Speaker Change: And it's not a huge negative for Churchill, they're a big company, but that's our indicative of little political fights that happens sometimes in the industry.
Speaker Change: So our results were down a little bit the revenues were down a little our profit was up a lot.
Speaker Change: So you kind of wonder well is that is that.
Speaker Change: A recession and I think it was really a very rainy Mardi Gras Mardi Gras is one of our busiest weekends. This year kind of get rained out and so I don't think it was a recession I think it was raining.
Daniel Lee: I think it was raining. At Colorado, everything's new, hard to tell. Chicago still, everything's new and growing, hard to tell. And both of those markets are so unsaturated that even if they weren't new, I don't know that we'd ever feel it. Yeah, right. Exactly. At Tahoe, it was not a very strong winter. But Larry Ellison tore down part of the building to replace it, and so it's got much less banquet space. He tore down the highest end suites, and we're still doing okay. So it's kind of like, was that a recession or was that the fact that he tore down part of the hotel to rebuild?
Speaker Change: Yeah.
Speaker Change: Colorado, Everything's, new hard to tell Chicago, still everything's, new and growing hard to tell and both of those markets are so unsaturated that even if they werent, new I don't know that we'd ever feel it but yeah right exactly.
Speaker Change: Tahoe, but it was not a very strong winter.
Speaker Change: But Larry Ellison tore down part of the building to replace it and so it's got much less banquet space tore down the highest end suites.
Speaker Change: And you know we're still doing okay. So it's kind of like was that a recession or is it. The fact that he tore down part of the hotel to rebuilt and I think the second thing is more important than the first thing. So we're not that's a good question for somebody like Penn National or Boyd Who's got dozens properties all over the country.
Daniel Lee: And I think the second thing is more important than the first thing.
Daniel Lee: So we're not, that's a good question for somebody like Penn National or Boyd who's got dozens of properties all over the country, and I'm not sure we'd know. So, and I guess a lot of this tariff stuff affects... International stuff, like Canadian stuff. You know, there are all these news stories about how bookings of flights coming to the U.S. for this summer are down a lot. Well, you know, if somebody from Europe wanders into one of our casinos, our jaws drop open. So I don't think that impacts us at all. Got it.
Speaker Change: And I'm not sure we'd note.
Speaker Change: So in the end and I guess the.
Speaker Change: A lot of this tariff stuff affects international stuff like Canadian somebody you know that there are.
Speaker Change: All of these new stories about our bookings of flights coming to the U S. But this summer are down a lot.
Speaker Change: Body from Europe wonders into one of our casinos are draws drop open so.
Speaker Change: I don't think that impacts us at all so.
Speaker Change: Got it if I may have a mulligan then that question then could you quickly give us some capex expectations and liquidity for the second half of the year. Thank you.
Daniel Lee: If I may have a mulligan on that question then, could you quickly give us some capital expectations and liquidity for the second half of the year? Thank you. Well, the, the... I'm sorry, the first part of that? Second part was liquidity. Our liquidity's in good shape. Now, as you start spending money on the permanent American place out of cash flow, then your surplus cash doesn't grow, right? So we're watching it pretty carefully. But eventually, somewhere in the next year, we expect to refinance. Our bonds mature in 2028. So nobody ever waits until the end. You would refinance in 2027 anyway.
Speaker Change: Yes.
Speaker Change: Well the the.
Speaker Change: I'm sorry, the first part of the second part was liquidity.
Speaker Change: Liquidity is in good shape.
Speaker Change: Now as you start spending money on the permanent in American place.
Speaker Change: Out of cash flow.
Speaker Change: Then your surplus cash doesn't grow right. So so we're watching it pretty carefully.
Speaker Change: But eventually somewhere in the next year, we expect to refinancing our bonds mature in 2028, so nobody ever waits until the end you refinanced in 2027 anyway, so refinancing they're callable now.
Daniel Lee: So refinancing, they're callable now at 102. 102 and change, yeah. Yeah, so it's the normal timeframe where you would refinance the bonds in the foreseeable future. And we think the most economical way to finance the permanent American place is to refinance our debt with a new debt structure, which might include a bigger credit facility so we don't have to carry as much negative carry on the debt while we build, and a new bond deal. So you refinance the existing debt. And as part of that, you raise the money to build the permanent American place. That's our expected strategy.
Speaker Change: Two unchanged. So it's the normal timeframe, where you would refinance the bonds.
Speaker Change: In the foreseeable future and we think the most economical way to finance the permanent American place is to refinance our debt with a new debt structure, which might include a bigger credit facility. So we don't have to carry as much negative carry on the debt while we built.
Speaker Change: And a new bond deal, so you're refinancing existing debt and as part of that you raised the money to build the permanent American place bets are expected strategy. There are other means of us for us to do it but we think that even in a bond market that might be a little.
Daniel Lee: There are other means for us to do it, but we think that's, even in a bond market that might be a little choppy, we still think that's the most efficient way to do it. And you have to remember these bonds, even these bonds won't be outstanding all that long. You get the permanent American place open, and we will jump to a better tier of credit and can probably refinance them yet again. So when you model everything out, and you start looking at it, whether you pay 9% or 8% on the debt doesn't move the needle all that much.
Speaker Change: Choppy, we still think thats, the most efficient way to do it and you have to remember these bonds. Even these bonds won't be outstanding all that long he gets permanent American place open and we will jump to a better tier a credit and can probably refinance them yet again, so so weather when you model everything out and you start looking at it whether you pay.
Speaker Change: 9% or 8% on the debt doesn't move the needle all that much that's probably not out there all of that law.
Daniel Lee: That's probably not out there all that long. And so we will get the debt refinanced at the right time. But if we didn't build American place, we would start building up cash pretty fast. But of course, we intend to build it. So we do pay pretty close attention to our liquidity, because up until, when we say we can start construction without redoing the bonds, but as we do that, we have to make sure that as construction accelerates, that we're watching carefully our liquidity.
Speaker Change: So we will we will get the debt refinance at the right time, but if we didn't build American place, we will start building up cash pretty fast but of course we.
Speaker Change: So so we do pay pretty close attention to our liquidity because up until when we say we're going to we can start construction without redoing the bonds, but as we do that we have to make sure that as construction accelerates that we're watching carefully our liquidity.
Daniel Lee: I'm going to take a different stab at it and maybe that will help you too. If you think about the way our cash flows typically go, especially Colorado, a lot of our business tends to be second, third quarter seasonal. And so over the next two quarters, you should see an outsized effect from EBITDA for what it's worth. The spend on the American Place facility from here is extremely modest for what it's worth. Maintenance CapEx, historically for us, has been in the ballpark of three million bucks a year. Some years it's as high as five, but it's again not a huge number.
Speaker Change: I'm going to take a different stab at it and maybe that will help you to if you think about the way our cash flow is typically go especially.
Speaker Change: Especially Colorado.
Speaker Change: Lot of our business tends to be second third quarter seasonal and so over the next two quarters, we should start to.
Speaker Change: You should see an outsized effect from EBITDA for what it's worth the spend on the American place facility from here as well is extremely modest for what it's worth maintenance Capex historically for US has been in the ballpark of 3 million Bucks a year. Some years is as high as five but it's again not a huge number and then from a cash tax.
Daniel Lee: And then from a cash tax point of view, we ran some very preliminary analysis with our outside tax consultants the other day, and we're not looking to pay cash taxes because of all the stuff we've built and the depreciation shields that we get from that. We're not expecting to pay cash taxes through at least 2029. There's some chatter on some tax laws getting changed and potentially some retro tax effects as well. And if some of those things come into play, then it could be well into 2030 before we're paying cash taxes. So I think when you take all of that in its totality, we're just fine.
Speaker Change: <unk> point of view.
Speaker Change: We ran some very preliminary analysis with.
Speaker Change: With our outside tax consultants, the other day and we're not looking to pay cash taxes because of all the stuff that you've built and the depreciation shield that we get from that we're not expecting to pay cash taxes through at least 2029, there's some chatter on.
Speaker Change: Some some tax laws getting changed and potentially some retro tax effects as well and if some of those things come into play.
Speaker Change: And it could be well into 2030 before we're paying cash taxes. So I think when you take all of that in its totality. We're just fine.
Daniel Lee: We always talk about how we can go well into 2026 before we need to be out and financing for the permanent. A big part of it is because, quite frankly, you just don't spend a lot of money here in the near term on the permanent. You don't spend a lot of money leveling out the land or pouring foundations. Spending right now is on architects and civil engineers and so on. And that's probably in the next three months less than a million dollars. And that will grow in the fall. At some point, you pull a permit and you start the foundation.
Speaker Change: We always talk about how we can go well into 2026 before we need to be out in and financing for the permanent.
Speaker Change: A big part of it is because quite frankly, just don't spend a lot of money here in the near term on the permanent you don't spend a lot of money.
Speaker Change: Leveling out the land or putting pouring foundations are spending right now is on architects and civil engineers and so on.
Speaker Change: And that's probably in the next three months less than $1 million and.
Speaker Change: And that that will grow in the fall.
Speaker Change: At some point you pull a permit and you'll start the foundation, but initially that's a guy driving a bulldozer, it's not a lot of people. It's late in the construction projects.
Daniel Lee: But initially, that's a guy driving a bulldozer. It's not a lot of people. It's late in the construction project that the spending per month gets high. So most of the money to build the permanent American place will actually be spent in 2027, second half of 2026. Some of it is even post-opening because you pay those bills in arrears. And so our... for outside capital is really your way. And I think the only other thing to kind of reinforce there is Silver Slipper is on the uptick now. Colorado is certainly on the uptick. It was a cash drain over the last several years and is on the verge of becoming a cash generator, a positive for the business.
Speaker Change: Spending per month gets hi, so most of the money to build the permanent American place will actually be spent in 2027 second half of 2026. Some of it is even post opening because you pay those bills in arrears and so our need for outside capital is really your way.
Speaker Change: And I think the only other thing to kind of reinforce there is silver slipper is on the uptick now.
Speaker Change: Colorado is certainly on the uptick it was a cash drain over the last several years and is on the verge of becoming a cash generator of positive for the business. That's obviously extremely helpful. And then you've got American place, which continues to grow as well and not insignificantly by the way and so I think when you take all of that in its totality.
Daniel Lee: That's obviously extremely helpful. And then you've got American Place, which continues to grow as well, and not insignificantly, by the way. And so I think when you take all that in its totality, we're mindful of the capital markets and where they are, but the reality is I did not need to be in the market a month ago and I don't need to be in the market tomorrow. So we can sit tight for a little bit and prepare for the right day. I appreciate all the calling, thank you so much.
Speaker Change: We're mindful of the capital markets and where they are but the reality is I don't need I did not need to be in the market a month ago, and I don't need to be in the market tomorrow.
Speaker Change: So we can sit tight for a little bit and prepare for the right day.
Speaker Change: Another color.
Speaker Change: You mentioned it briefly but are.
Speaker Change: Underlying it again.
Speaker Change: Chicago is not very seasonal theres, a little bit of seasonality, but not much.
Speaker Change: Silver slipper same thing not very seasonal.
Speaker Change: But rising Sun, Colorado, and Tahoe are all seasonal favor in the summer.
Daniel Lee: And it's almost like all the casinos in Atlantic City, they make at least half their earnings for the year they make in July and August. And those three markets, it's similar. We make most of our money in the summer. disproportionate money. Hey, Dan, we've got two minutes, so if you can take one last question really quick, let's do it.
Speaker Change: And it's almost like all the casinos in Atlantic City, they make at least half the earnings for the year. They make in July and August in those three markets at similar we make most of our money in the summer.
Speaker Change: Disproportionate money in the summer.
So hey, Dan we got two minutes. So it can be if you can take one last question really quickly.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Dwayne Myers: Okay, we can take the last question. It's for Dwayne Myers of SMH Capital Advisors. Your line is already open. Yeah. Thank you for all the pillow and everything. If the bond market doesn't open back up, kind of what are your opportunities? Is there like joint ventures available? you know.
Speaker Change: Okay. We can take the last question.
Speaker Change: It's for Duane.
Speaker Change: <unk> of SMH capital Advisors. Your line is already open.
Speaker Change: Thank you for all the color on everything.
Speaker Change: The bond market doesn't open back up.
Speaker Change: Kind of what are your opportunities as joint.
Speaker Change: Joint ventures are available.
Speaker Change: You know.
Daniel Lee: Besides going back to the legislature and how likely is that to get approved I know that they don't want you know any downtime and they're collecting taxes off of it. Well, first off, I think it's highly likely to be approved because they don't want us to lay off 600 people and stop paying gaming taxes. And the last time we had to do that was the Potawatomi lawsuit, and it was readily approved. So if we went now and said, look, the tumult in the bond market is causing us to have an additional delay, we'd like to have additional time, I believe we would get it.
Speaker Change: Besides going back to the legislature and Hal.
Speaker Change: How likely is that to get approved.
Speaker Change: I don't want.
Speaker Change: Any downtime and they're collecting taxes okay.
Speaker Change: Okay.
Speaker Change: Okay, well first of all.
Speaker Change: Yes.
Speaker Change: I think it's highly likely to be approved because they don't they don't want us to lay off 600 people and start paying came in Texas and the last time, we had to do that was a part of army lawsuit and it was readily approved so if we went now and said look the tumult in the bond market.
Speaker Change:
Speaker Change: Is causing us to have additional.
Speaker Change: Additional delay we'd like to have additional time I believe we would get it I don't think we need to do that.
Daniel Lee: I don't think we need to do that. You have to remember in the bond market, and some of you are in the bond market, every day they get interest payments, and the cash starts to build up. And at some point, the floodgates break, and they have to go put that money to work. And so we're waiting for that to happen, and it will happen. The windows open and close pretty regularly in the bond market.
Speaker Change: You have to remember in the bond market.
Speaker Change: And some of your in the bond market every day, they get interest payments and the cash starts to build up and at some point the floodgates break and they have to go put that money to work.
Speaker Change: And so we're waiting for that to happen and it will happen the windows open and close pretty regularly in the bond market, but if it didn't.
Daniel Lee: But if it didn't, certainly a joint venture would be a possibility. We don't need to go there. I think that's pretty expensive. We could do a REIT like Bally's is doing downtown, and we get phone calls from REIT guys all the time. We're one of the few casino companies that still owns most of our real estate, virtually all of our real estate. We've never gone the REIT route. We could do Waukegan as a REIT, or we could REIT our other projects and do a sale lease back and raise cash that way. Now, that ultimately is very expensive capital because you can't unwind it.
Speaker Change: Certainly a joint venture would be a possibility don't need to go there I think that's pretty expensive, we could do a REIT like valleys are doing downtown.
Speaker Change: Phone calls from REIT guys. All the time, we're one of the few casino companies is still owns most of our real estate up virtually all of our real estate, we've never gone the route.
Speaker Change: We could do well keegan as a REIT or we could REIT or other projects that do a sale leaseback and raise cash that way now that ultimately is very expensive capital because you can't unwind did it goes on forever and so so I'd rather not go that route but we could.
Daniel Lee: It goes on forever, and so I'd rather not go that route, but we could. Or you just suck it up and pay a little higher interest rate. As I said a minute ago, it's not going to be outstanding for all that long, and there is some interest rate. That would be the most expensive capital we could do, and so that is not going to be done. I think, too, what you can't forget is if you go back to COVID, you had a debt market that shut down for all the reasons that you know, but you didn't have a functioning debt market.
Speaker Change: Or you just suck it up and pay a little higher interest rate as I said a minute ago.
Speaker Change:
Speaker Change: It's not going to be outstanding for all that long and there is some interest rate.
Speaker Change: The bonds done either.
Speaker Change: Even in the rough market.
Speaker Change: We're not we don't have our backs to the wall.
Speaker Change: We have about a year to figure this out and I'm confident the bond market will return to normal somewhere in the next year.
Speaker Change: The one thing that I'm certain we will not do is issue equity or anything equity related.
Speaker Change: At a price anywhere close to where our stock is now that would be the most expensive capital we could do it.
Speaker Change: And so that that is not.
Not going to be done.
Speaker Change: Thank to what you can forget is if you go back to Covid, you had a debt market that shut down for all the reasons that you know, but you didn't have a functioning <unk> market. If you fast forward to today.
Daniel Lee: If you fast forward to today, like I mentioned at the start of the call, you do have a debt market that's starting to function behind the scenes. Look, if we went out at the end of March, the market was extremely functioning. We actually could have gone out and gotten a very good, well-priced debt deal done. We weren't ready back then for what it's worth. And then the world kind of unwound kind of overnight. Just don't forget that as quickly as it all unwound, it can wind back into a positive light. And it's been doing that in real time over recent weeks, so I would just kind of reinforce that for you.
Speaker Change: Like I mentioned at the start of the call you do have.
Speaker Change: A debt market that's <unk>.
Speaker Change: <unk> the function behind the scenes. It was you know look if we if we went out at the end of March.
Speaker Change: The market was extremely functioning we actually we could have gone out and gotten a very good well priced that deal done.
Speaker Change: We weren't ready back then for what it's worth for an extra day, yeah, Yeah, and then the world kind of unwound kind of overnight just don't forget that as quickly as it all unwound. It can wind back into a positive light and it's been doing that in real time over recent weeks. So I would just kind of reinforce that for you.
Daniel Lee: Let me put out one other thing. Back when we were competing for this license against some companies that were bigger than us, to prove that we could finance it, we arranged a backup financing with a large private equity firm. And that agreement requires us to keep it anonymous, but it's a very large firm. It's expensive. We'd have to tweak some of the covenants in our existing debt, but it's still there. So we do have a backup financing facility that we could turn to, and I'd much rather do that than anything related to equity or even the REIT thing.
Speaker Change: Point out one other if it back when we were competing for this license against some companies that were bigger than us.
Speaker Change: To prove that we could finance it we arranged a.
Speaker Change: Backup.
Speaker Change: Financing with a large private equity firm and that agreement requires us to keep it anonymous, but it's a very large firm.
Speaker Change: It's expensive.
Speaker Change: We'd have to tweak some of the covenants in our existing debt, but it is still there. So we do have a backup financing facility.
Speaker Change: That we could turn to and I'd much rather do that than anything related to equity or even the right thing.
Daniel Lee: And so we have a number of avenues we can go to to get this done.
Speaker Change: Yeah.
Speaker Change: So we have a number of avenues, we can go to.
Speaker Change: To get this done.
Daniel Lee: But I think I just want to look at the likelihood that the debt markets are completely shut down for the next year for smaller companies. I just that's that's extremely unlikely for the other. We have lots of alternatives. One of the alternatives is. and so on.
Speaker Change: But I think I just wanted to look the likelihood that the debt markets are completely shut down for the next year for smaller companies.
Speaker Change: That's extremely unlikely.
Speaker Change: We have lots of alternatives.
Speaker Change: One of the alternatives is just stall.
Speaker Change: And worst cases.
Speaker Change: I would not want to do this I'm fighting very hard not to do it but if you ended up closing the temporary on opening the permanent a year later.
Daniel Lee: But if that's what the position you were in and the legislature did not give you the reprieve... financially our company would be fine. And so you don't, you don't not lose the license if you don't open the permanent. Exactly, that's my point. There is no deadline by which we have to open the permanent. There is only a deadline on which we operate the temporary. So we are rushing, not rushing, we are diligently working towards opening the permanent at the time that the temporary has to be closed so we can transition the employees over smoothly. That's in our best interest.
Speaker Change: Actually our company would be fine now I'd, rather not do that because of the 600 employees and so on but if that's what if that's what the position you were in the legislature did not give you the reprieve.
Speaker Change: <unk> our company would be fine.
Speaker Change: And so you do not lose the license if you don't know.
Speaker Change: Exactly that's my point, there is no deadline by which we have to open the permanent there was only a deadline on which we operate the temporary so we are rushing rushing we are <unk>.
Speaker Change: Diligently working towards opening the permanent.
Speaker Change: Okay.
Speaker Change: At the time that the temporary has to be closed. So we can transition the employees over smoothly. That's in our best interest. It's also in the best interest of the state, which is why I'm confident that if we needed a little gap in there where we could operate the temporary longer I think we get I mean, it's this is a pretty.
Daniel Lee: It's also in the best interest of the state, which is why I'm confident that if we needed a little gap in there where we could operate the temporary longer, I think we'd get it. I mean, it's, this is a pretty rational state. The governor has been behind the scenes, very supportive of this because we do pay a lot of taxes and and we're doing our best to be a good licensee and I think the Gaming Commission recognizes that and and so as long as we are operating diligently to fulfill all the promises that we have made to the state, they'll work with us.
Speaker Change: Rational state.
Speaker Change: The governor has been behind the scenes very supportive of this because we do pay a lot of taxes and we are doing our best to be a good licensee and I think the gaming commission recognizes that and.
Speaker Change: And so as long as we're operating diligently to fulfill all the promises that we've made to the state there.
Speaker Change: They'll work with us.
Operator: Okay. That clears a lot. Okay. Thank you very much. Yeah. Thank you. All right. Thank you, everybody. And we look forward to. chatting another quarter, chatting another quarter. Thank you.
Speaker Change: Okay that clears a lot okay. Thank you very much.
Speaker Change: Thank you alright, thank you everybody.
Speaker Change: We look forward to.
Speaker Change: Chairing another quarter, just getting another quarter.
Speaker Change: So.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: Thank you ladies and gentlemen, this concludes today's conference call.
Speaker Change: Thank you for your participation and you may now disconnect.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yeah.