Q2 2025 Full House Resorts Inc Earnings Call

Speaker #1: Greetings, and welcome to the Full House Resorts second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.

Speaker #1: If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like turn the conference over to your host, Lewis Fanger, president of Full House.

Speaker #1: You may begin.

Speaker #4: Actually, go ahead and kick it off, Adam. Sorry. Thank you. Good afternoon, everyone. Welcome to our second quarter earnings call. As always, before we begin, we remind you that today's conference call may contain forward-looking statements that we're ing under the Safe Harbor provision of Federal Security Laws.

Speaker #4: 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 captions forward-looking statements for the discussions of risk that may affect our results.

Speaker #4: Also, we make reference to non-GAAP measures such as adjusted EBITDA for reconciliation of those measures. Please see our website, as well as various press releases that we issue.

Speaker #4: Lastly, we are also broadcasting this conference call at FullHouseResorts.com, where you can find today's earnings release as well as our SEC filings. And with that, back to you, Lewis.

Speaker #5: good afternoon, everyone. I know it's a busy day for many of you today, so we'll keep our prepared remarks on the brief side, and then we'll head quickly, into questions.

Speaker #5: we're actually sitting here at American Place today, so we'll start there. we're very pleased with how our temporary American Place facility has ramped up in the second quarter.

Speaker #5: We had record revenue. It was 30.7 million dollars, up about 13%. And we also had record adjusted property EBITDA of 8.9 million dollars, which was up 17%.

Speaker #5: I don't think the July gaming figures are out quite yet in Illinois, but rest assured, we had other very solid month of growth in the month of July.

Speaker #5: That growth is not by accident. Part of our continued growth is due to customer awareness, which continues to improve by the day. after all, we are still a relatively new casino, and building awareness is a natural part of any casino ramp.

Speaker #5: When encouraging sign is the number of new signups into our database, which recently crossed 107,000 people, and the new, new signups into the database continue at the same pace that we saw several quarters ago.

Speaker #5: which is a great sign for us. We also continue to grow because we continue to fine-tune the amenities that we have here at American Place.

Speaker #5: As an example, one of our restaurants that we opened with originally had way too many seats, and so we put up some curtains, turned half of it into a comedy club, started bringing in comedians like Kevin Nealon, and it's helped increase our visibility as well as our overall operations.

Speaker #5: Similarly, we've had, customer inquiries for the longest time about why we don't have a poker room. Fast forward to today, when we took an underperforming corner of the casino and transformed it into a small poker room.

Speaker #5: We just concluded an operations play day for the new poker room, which went well. And we're prepared open it as soon as we get the green, green light from regulators.

Speaker #5: If you think about EBITDA growth at American Place, we earned a ittle over 29 million dollars in all of, 2024. And so for 2025, we are expecting to have something like 20% growth for the full year.

Speaker #5: Switching over to American, I'm ry, switching over to Chamonix. There are three major points that I want make about Chamonix. First, our own gaming revenue continues to grow, and we have done that while having negligible impact on gaming revenues for rest of the city.

Speaker #5: That's a very important point because it tells you that our gaming market continues to be undersaturated. otherwise, our competitors as a whole would be down 20 or 30 percent or some big number, but they're not.

Speaker #5: What that in turn should tell you is that our gaming revenues at Chamonix are nowhere near done growing. This is a market that has been starving for high-quality gaming product.

Speaker #5: We are the first and only high-quality product in Crypple Creek, and so we need to build awareness, which takes time. It is happening in real time, and as awareness continues to grow, we will be the beneficiary.

Speaker #5: Second, at this point, our cost structure is pretty much fully baked. That means as those revenues continue to grow, we will see meaningful flow-through down to EBITDA.

Speaker #5: And third, although preliminary, given that we haven't closed the books yet, it does appear that we will be EBITDA positive in July at Chamonix.

Speaker #5: With that said, let's talk specifically about Chamonix's second quarter. Very late in the first quarter, we hired a new general manager followed by a new chief marketing officer halfway into the, current, second quarter.

Speaker #5: given the long lead time for the team to analyze the marketing database and to send out marketing, mailers, there wasn't much impact that our new team could make, here in the second quarter.

Speaker #5: We are seeing their effects in the third quarter with gaming revenue continuing to grow in July. From a cost perspective, though, our new GM could and did have an immediate effect.

Speaker #5: If you compare sequential quarters, so comparing the second quarter of 2025 to the first quarter of 2025, what you'll see is revenue was virtually flat at 11.6 million dollars.

Speaker #5: If you look at operating expenses, you'll see massive improvement. Operating expenses were 1.2 million dollars lower versus the first quarter 2025. Implying nearly 5 million dollars of annual cost synergies.

Speaker #5: It's made up of a collection of small things that don't impact the customer experience, like new labor controls to improve scheduling and limit unnecessary overtime.

Speaker #5: We don't think we're done with those cost savings yet, perhaps more importantly, though, we are not yet done growing revenues. Those two items in concert are what will propel Chamonix to the profitability levels that we believe it can achieve.

Speaker #5: our other properties are, less important than the two that just mentioned, but they're , important, and they are holding their own. Silver Slipper is the lion's share of remaining properties.

Speaker #5: Revenue there was down 1.6 million dollars as we reined in some overcomping levels. Adjusted property EBITDA would have been flat except for a one-time non-cash accounting item.

Speaker #5: we also had a parking garage issue that briefly closed our garage heading into a key holiday weekend. Stockman's Casino was sold on April 1st, so that dropped out of our consolidated financials in this year's second quarter.

Speaker #5: and we also have a new general manager at Grand Lodge up in Lake Tahoe. He came to us from a large Native American casino near Sacramento.

Speaker #5: His work experience has been focused on player development and casino operations. And we think he's going be a great addition up there. maybe a quick comment, on the potential for us to refinance our existing debt and then I'll turn it over to Dan.

Speaker #5: But we, we do continue to believe that the debt markets are the appropriate place for our financing of the permanent American Place facility. Accordingly, we, like probably many of you, watched the debt markets extremely closely.

Speaker #5: The debt markets hit a temporary blip when the tariff noise happened in April. Since then, we've been pleased to watch the high-yield markets rebound somewhat swiftly.

Speaker #5: The high-yield markets have become increasingly accommodative. Though, obviously, we have not yet launched a publicly launched deal. that's all I had, Dan. You want to take some cleanup there?

Speaker #5: It's still publicly or privately.

Speaker #4: Or privately. Very true. Very true.

Speaker #5: We keep watching for, an opportunity and, and I think that will come. as a practical matter, the, we're allowed to operate the temporary casino here at American Place until August of 2027.

Speaker #5: As long as we get underway with construction, sometime this year, we can make that deadline. I think it's a practical matter if, if the bond market didn't cooperate and we had to delay that, we can probably get an extension of the period of time to operate the temporary.

Speaker #5: After all, we pay about 25 million a year in tax revenue and employee over 500 people. And we had to do that before with the Pottawatomi lawsuit on confident we could do it again.

Speaker #5: The first choice is for the bond market to cooperate and allow us to get the financing done and get going with construction. That would be the best for all worlds.

Speaker #5: but the, high-yield market tends to have windows that open and close and at the moment it's open, somewhat of a crack, a little more than a crack.

Speaker #4: A little more than a crack. A lot more than a crack, ally.

Speaker #5: But, and, h, but it's kind of the summer doldrums, so we're, we're looking for an opportunity. But if, if we don't get it done, it's not the end of the world.

Speaker #5: We'll just be a little bit later, and I think Lewis did a pretty good job on that, so I'm happy to go to questions. So.

Speaker #5: Yeah, I think I, I think you mentioned, you ow, July being strong. I mean, we, we, we, you mention we expect, to be up about, 20% this year at American Place.

Speaker #5: July alone, I think, is probably up 30%. So it, , you know, we're doing pretty well. And then in Colorado, you mentioned that it's, cash flow positive in July.

Speaker #5: Pretty clear to probably be cash flow positive for the third quarter. And, and the, the goal is to keep a cash flow positive thereafter, although it obviously gets more challenging as you go into the off-season.

Speaker #5: But I think with the changes we've made, management changes, you know, we, we really, at that property, it's, it's a little different than American Place cause it, it has a hotel in American Place doesn't.

Speaker #5: And the hotel fills on weekends, but it doesn't fill during the week. And in fact, sometimes during the week, the occupancy gets pretty low.

Speaker #5: And, and we end up, losing money operating all these amenities in a hotel when it's , occupancy is low. The normal fix to that is to have a sales force that, that works for years in advance and helps fill it midweek with meetings and conventions and so on.

Speaker #5: Quite honestly, we've just hired that sales force. We had a salesperson who would say it was pretty ineffective. We're hiring people now, and there's a lead time on that.

Speaker #5: And, and we'll eventually get there just like, almost any casino hotel you fill midweek with meetings and groups and conventions. And then the weekends are, are busy with, with gamblers.

Speaker #4: That sales job, though, did get a lot easier. It's, it's not easy to try and sell space or rooms before you ever open.

Speaker #5: Right.

Speaker #4: before people can see what you've built. And I, and I will say that at this point, it, it did get a easier.

Speaker #5: And, and frankly, you know, the, the, the icon I always look at is Monarch, who does very well on Blackhawk, which is a very similar market.

Speaker #5: And, and they do a very good job, they have a nice property. I ink our casino itself is actually nicer than theirs, and I think our hotel is pretty equivalent to theirs.

Speaker #5: They're bigger than us, but we're 60% their size. And their public company, and they only have two casinos, that one and the in Reno.

Speaker #5: They don't break it out, but the one in Reno has been around for a long time, so you can look back and see approximately what make in Reno.

Speaker #5: And the bottom line is they make somewhere north of 100 million a year in Blackhawk. And it's like, wow, we're two-thirds their size. we're eventually going to be pretty profitable.

Speaker #5: In terms of meeting room space, we actually have far better meeting room space than they do. They're, they're in a very constrained site. They have, they don't have much meeting room space.

Speaker #5: they really don't have a venue to have entertainment. We do. And, and so I, I ink we, we will do much better, but we've had some growing pains out of the box and, and we're ixing that.

Speaker #5: That's, I guess, it. I am, the Silver Slipper is doing well in a lot of ways, but Lewis mentioned the parking garage. We had a ramp in the parking garage that had developed a structural problem, and we had to close the parking garage through a key weekend while we fixed it.

Speaker #5: and, most of the parking at that property is in the parking garage, so we were scrambling a bit to have valet parkers and ything.

Speaker #5: But we got through the weekend fine, and, and, and otherwise, the property's doing pretty well. in Tahoe, we're off a little bit. The Tahoe property, we're in the main tower on one side of the street, and there was a, a bunch of meeting room space, a restaurant, and some high-end suites that were along the beach on the other side.

Speaker #5: And the hotel was bought by Larry Ellison who is in the process of, of upgrading the hotel significantly. And, one of first things he did was tear down the stuff all along the lake, and it's being replaced with much nicer stuff.

Speaker #5: That stuff won't be completed for another almost two years. And in the meantime, there's a less wedding business, meeting business, less high-end suites. at the property, and that has an impact on the casino.

Speaker #5: Given that, we're actually doing pretty well. And so, when it's all done, Ellison Group is going to make it into one of the leading resort hotels in the whole country.

Speaker #5: And, and we hope to be part of that. We're on kind of a short-term lease there, but it's been renewed many times. And the past, we've actually operated that casino for about 12 or 13 years.

Speaker #5: And we hope to continue to do so as Mr. Ellison improves the property. that's Owen, we continue to work on the possibility of relocating the license.

Speaker #5: In Indiana, the, the, as we mentioned, I ink on the last call, the, state legislature approved a bill that funded a study commission that's being undertaken now by the casino control commission to determine the benefits to the state from legalizing a, a new license or allowing one to move.

Speaker #5: We would be the logical one to move. and, where it might be best to move it and what the benefits of the state would be.

Speaker #5: we're pretty confident that that study will show that there would be significant benefits and, and we'll see where it goes from there.

Speaker #4: Let's, h, let's go into some Q&A.

Speaker #1: Thank you. We will now be conducting a question and answer session. If you would like to ask a estion, please press star one on your telephone keypad.

Speaker #1: confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue.

Speaker #1: question comes from the A line of Jordan Bender For from CitizensJMP. You may begin with your estion.

Speaker #6: Hey, this is Eric Ross. I'm one for Jordan. Thanks for, h, taking our estions. I was wondering what are of the early factors we should be looking at to determine success and earnings ramp at the property in Colorado?

Speaker #5: Well, we're ready started by having the expense structure, reduced and, and some of that was pretty easy. Just, not, not, not really easy, but, putting constraints on, overtime and we actually changed the pay week, so that, when we figure out that if you had the pay week ending on, say, a Sunday, well, the time where all of a sudden you need to pull people in to, to staff is on a weekend.

Speaker #5: And that's when you're y. and we shifted it, I believe, to Thursday. And the idea is that if you, if you pull somebody in on a Saturday or Sunday and it's the end of the pay week, you end up paying overtime.

Speaker #5: If the pay week ends on Thursday, and you end up having somebody work on a Saturday or Sunday, you can tell them to take Tuesday and Wednesday off, so you don't end up in overtime.

Speaker #5: So it's just a le example. We did that. We've, doing better with our laundry contract, doing better with staffing our housekeeping contract. Those are both done by outside parties, and we're saving quite a bit of money there.

Speaker #5: and so the, the cost reductions, as Lewis mentioned, are already running 5 million a year. In fact, had we put those in place a year ago, we would be profitable on a currently 12-month basis.

Speaker #5: And so, so the, cost savings has begun and is already showing, benefits. and, and there is some expenses of, of some of the people we've replaced, get severance pay.

Speaker #5: And, and that's, dragging us a little bit, obviously, that ends at some point. and then, and then now it's getting the, marketing up. And just like at American Place, where we've built a mailing list, and we target it properly, and we work on it, it's a slow process.

Speaker #5: And, and there's but it's a steady process. It is an underserved market. There's a lot business out there to get. We just have to go out and get it.

Speaker #5: And, and so we have a, actually about five people now, we have a, a corporate chief marketing officer. We have a corporate director of advertising.

Speaker #5: There were, and both of them are doing some of the roles that we had an outside advertising agency do before. Some of their costs are actually offset by the advertising agency stuff.

Speaker #5: And, but then at the property, we have a, a new director of marketing who we hired, who has a long history of, of being in that role at, at a of successful properties.

Speaker #5: He joined us from, the Hollywood and Toledo. And, he used to work in Blackhawk and has, and he and his wife wanted to get back to Colorado, and we were happy to facilitate that.

Speaker #5: A lot of experience. We have a new director of sales just starting. Then, then the difference between mar-marketing is encompasses everything. Sales is really focused on getting meetings, conventions, and so on in place.

Speaker #5: In fact, not long ago, Lewis and I were having dinner with, actually, I think it was your bankers at Citizens. At, Durango Station, and the, GM at Durango Station came by, and they only have 200 rooms.

Speaker #5: And, and we asked, you know, how they were doing. We couldn't get a room that nice fully booked. And he says, Yeah, they were doing very well with the Nevada Society of Tax Accounts." And it's like, "Who knew that they'd go to Durango Station for their thing?" And, and, and they, the room rate was $800 that night.

Speaker #5: Because there were enough tax accounts who wanted to stay there, they had driven up the room rate. And the GM at Durango Station told us he had actually removed the rooms from the casino block because the, the, the tax accounts were paying so much money.

Speaker #5: And, and I said, "Well, how many people do you have in, sales and marketing?" And he stopped and he thought for a moment, and he says, "Four plus an assistant." And I said, "Well, we're trying to hire our first one, and we have 300 rooms." And so now we have a couple, but that, that shows you where that's something honestly, we should have done three years ago.

Speaker #5: and, and now we're trying to play catch up. And that will pay dividends over the long term. and so we're there. and in the normal marketing, we're looking stuff.

Speaker #5: There's different, AI programs that we can use to improve our marketing where you go to the AI, consultants who come in and say, "Okay, here we have this database.

Speaker #5: it's a very large database there. because properties operate at 25 years, but a lot of people in that database are dead." And it's like, "Look through this database.

Speaker #5: Look who might just be a summer customer. Look who might, we haven't seen for a while, but it's ably still around. And what do we go and tell them and how what do we do with them?" , and, and so on.

Speaker #5: spending less money on network TV buys and more money on targeted, internet banner ads and, and, and so on. All sorts of stuff that, we're trying to get more sophisticated.

Speaker #5: We're trying to be better. And, and that will pay off over the long term. So I think what you're we're ready on your we are 100% of growth in Crypple Creek.

Speaker #5: Cripple Creek, as a town, is experiencing revenue growth. We're all aware of that. Now, we're not at 200%. What other guys are netting us out on is not down.

Speaker #5: And that's what we always thought. We thought we would grow the market, and we are growing the market. We just we would need to grow the market more, and we need to continue growing it for some period of time.

Speaker #5: And I think we will. And in fact, if you ok at the state of Colorado as a whole, we are 100% of the growth in the state of Colorado over the past six months, maybe the last past 12 months.

Speaker #5: And, and I think that will continue to be the case. There is nothing new being built anywhere in Colorado. Right? And there's nothing anywhere in the horizon being new built in Crypple Creek.

Speaker #5: So we have no new competition to worry about. we're in center of the state, so anything that happens in New Mexico or Kansas or Wyoming is irrelevant.

Speaker #5: The economies of both Denver and Colorado Springs are robust. The towns are growing. We're in a market with a rising tide.

Speaker #5: And yeah, out of the box, it's disappointing to me that we're not making more money than we have been. But I have a solid base, and I think going forward, we will grow revenues and keep costs down.

Speaker #5: And it will ultimately be very successful property. In fact, I was telling somebody we had dinner with last night. When we opened when I worked with Steve Winn and we opened Beau Rivage in Mississippi, at first, we considered it kind of a disappointment 'cause it, it struggled a little bit out of the box.

Speaker #5: And now, you know, 25 years later, it's still the leading casino in, in, Mississippi, makes 100 million a year, costs 670 million to build.

Speaker #5: but boy, the first year or two, we struggled. And, and we even almost bought an airline to run airline programs and so on. But eventually, if you build a quality product, it catches on, and it grows, and the customers learn it's there, and, and, and it'll be fine.

Speaker #5: And we will be fine in Colorado.

Speaker #4: I've said this maybe a few times in the past, but I think what people forget is we've been in Cripple Creek—not we, sorry, residents of Colorado Springs have looked at Cripple Creek for the last 20-plus years, and they've seen it as a market where there's just really bad product.

Speaker #4: Not simple product, it's maybe the right thing to say. There hasn't been elevated product ever. And so part of what we've been going against is we need to change 20-plus years of what I would call negative branding and we need to get people to realize, "Well, wait a minute.

Speaker #4: This is a brand new Crypple Creek." And that is happening. I'll tell you, when, when we look at our database, we, of course, look at all these different segments.

Speaker #4: The segment we're doing the best is the 750-dollar and higher average daily theoretical win. That's our top-tier player. That player has embraced and continues to embrace the property.

Speaker #4: We've run, quite a few focus groups just over the last few months. And what we've heard overwhelmingly from people, and usually you, you run these focus groups and people are quick to give you their complaints, it's been a little bit of the opposite for us where we run these focus groups and the feedback has been, "Yeah, the offers you're giving me are as good as the offers I'm getting for Blackhawk.

Speaker #4: You're, your rooms are great. Your property is great. I just haven't had a, a, a good player host that reaches out to me on a basis or whatever, whatever it is." And so part of our challenge is we need we, we need to make sure that we're cultivating that higher-end player.

Speaker #4: But the ultimate good news for us is they have been coming. They like the place. We just need to do, we need to do, do a little more fishing in, in, in that world.

Speaker #4: And, and so we'll get there as the brand continues to, to become more, more, more out there.

Speaker #5: Actually, the other comparison I just thought of is, when I was part of the group that put together the brigada in Atlantic City. And when it opened, the exam Atlantic City product at that time had gotten pretty dated and, , and, not particularly good.

Speaker #5: The Brigada was a completely different type of product. It took a little while for people to recognize that the Brigada was better than the product that had previously existed.

Speaker #5: And now, 20 years later, the brigada's been very successful. So. Sorry, long-winded answer to a quick estion. So.

Speaker #6: No, 's great. Thanks. And just another follow-up. On Colorado, if you guys could provide any color around convention mix or bookings and what, what the Chamonix is looking like heading to the summer, that'd be great.

Speaker #6: Thank you.

Speaker #5: Well, s-s-summer for us

Speaker #4: really tends not to be the, the group business time. It's really heading into the winter months. I ink Dan mentioned we just hired a brand new group director, literally, I think today.

Speaker #5: Yeah.

Speaker #4: So, so, so stay tuned. But, but, but look, the facility itself now is open. It's beautiful. You're, people that are booking groups are not worried about if, if the place will be open on time.

Speaker #4: All this stuff, all the problems you had before opening have largely gone way. there's still some lead time because some of these groups will plan a year in advance or six months in advance.

Speaker #4: And so, so it doesn't necessarily happen overnight. But will say we have people now in that group department that we're happy with. And, and I think they're going to do a very good job.

Speaker #4: So, probably a better, better question to ask us in another quarter.

Speaker #5: Yeah, the, the summer we're doing much better occupancy, but it is the summer and the mountains of Colorado. but back in the, first and second quarter, there were some midweek days where occupancy was very anemic.

Speaker #5: And we're hoping to not have that as we go into the off-season this fall.

Speaker #1: Thank you. Our next question comes from the line of Connor Parks with CBRE. You may proceed with your question.

Speaker #7: Hey, everyone. Thanks for, thanks for taking my questions. I guess first, popular discussion this earnings season has been around the big, beautiful bill. And the impacts to gaming and, and around regional gaming.

Speaker #7: I guess to try to date or maybe thoughts overall on, the potential impacts to your customers in any market, any database, whether it be no tax on tips or, you know, senior impacts, that would be great.

Speaker #7: Thank ou.

Speaker #4: Well, I, I, I think, to the extent that any of our customers have more money in their pockets, it's always a good thing. And, and so to the extent you have, have, reduced taxes whether it be on tips or, or, you know, tax rates that don't go up or whatever it is, that's ultimately n you ow, beneficial, ar-around our seats.

Speaker #4: the one ing you might not be thinking of is, , we, we do, have NOLs, net operating losses that we continue to build up on, on, on, on we'll just try to continue to build, I should say.

Speaker #4: And, and part of, part of the changes in that, in that bill actually benefit us. The, the, you know, re if, if you would have asked me six months ago when we expect to work through all of our NOLs, I would have old you maybe by the end of 2029.

Speaker #4: And these days, I, I think it's probably, not until the end of 2030. So we, I think we have the ability to, accumulate NOLs, even more NOLs than we would have under the old tax plan and, and, and, and fewer limitations on their use.

Speaker #5: And I should mention we get, for on a tax basis, we get accelerated appreciation on these new properties, which is part of what builds the OLs.

Speaker #5: So it's, it's a, it's a non-cash charge that results in cash savings on taxes. It's kind of what it really is. And, and that's a good thing.

Speaker #5: And, and, you know, the other thing is no tax on tips. to a to the extent a lot of our employees receive tips, it probably will put less pressure on us when people are seeking raises.

Speaker #5: And it's like, well, your income after tax is up quite a bit. So, you know, I ink if people are feeling more money in their pocket, they're less likely I, I say this, I'm sure I have employees listening, but it, e, hardly a day goes by I don't have somebody asking for a raise.

Speaker #5: And now I have something to ush back on. So.

Speaker #7: Helpful. Thank you. sh-shifting gears to Waukegan and, and, and the plan there. helpful color on how ou're thinking about the timeline and, , and the update on financing.

Speaker #7: I guess working backwards from August 2027, I guess at, at what point must you go into the regulators for a request for an extension or, or what point might you start thinking about that more seriously?

Speaker #7: You know, should the debt capital markets, you know, not be receptive over the next couple of ths?

Speaker #5: In vague terms, I think if we can get a shovel in the ground by year-end, you know, the, the very early stages don't take a whole lot of money.

Speaker #5: we actually just submitted to the city for a building permit of our foundations. Literally two days ago, I think. And so we've given them the, foundation plan.

Speaker #5: Try get the permit. So we have that out of the way. And the, the initial stage is literally a guy driving a bulldozer pushing dirt around.

Speaker #5: And then following him, you have a handful of people putting the foundations. And not a lot of money, but it does take time. And as long as we can get that started, somewhere in the second half of this year, even if we didn't quite have the bond issue done, you might start that just so you, you, you, you buy some time.

Speaker #5: you know, at some point, you start looking at, at the, the, the bonds have a call premium that goes away in February. Now, I hope we get this done well before that and, and we'll up paying a, a premium.

Speaker #5: but, you know, if you, if you slipped into next year before you could get going, you know, if, if you had a gap, 's, let's say you, you had to close the temporary because in August 'cause the state didn't let you operate past August.

Speaker #5: But you were ready to open in September or October, you might just choose to pay everybody, to keep the workforce together. And just like, Winn paid everybody during the pandemic.

Speaker #5: I mean, there and, and you can figure out the cost of that. that costs us some money, but, but it also costs money to disband a workforce and start a new one.

Speaker #5: I don't think it gets to that because if you go to the state and say, "Look, we don't want to have to lay everybody off.

Speaker #5: and we want to continue to pay taxes." Is that okay with you? And I think the state's going say, "Yes." Right? So I, I'm not really worried about, whether we had it.

Speaker #5: Now, if you had a, a very modest gap, you'd ably just pay people. And, and, and keep it together. because to, to we have a at workforce here.

Speaker #5: In fact, we have all sorts of awards as being one of the top employers in Chicago. we, we'd like to get.

Speaker #4: The only casino on that list.

Speaker #5: Yeah, the only casino on the list. And, and, and, and of course, we want to keep it all together. So I, I'm not actually worried it.

Speaker #5: but, you know, obviously, in the 10K, we have to disclose that our permission to operate the temporary only goes until August of 2027. Did once before seek approval and received it to have that date extended by two years.

Speaker #5: So if the, if the no. Now, we're saying all this the bond market as of today looks like we can get this done. it just happens to be the August doldrums.

Speaker #5: And so, if the bond market holds together for several weeks, we can probably go get this done. We were pretty much ready to go get it done last March.

Speaker #5: And then all the discussions of tariffs and liberation day, the bond market went away from us for a while. It's pretty much back to where it was.

Speaker #5: Not quite back to where it was then, pretty close.

Speaker #4: Not quite, but, but it has pulled back extremely quickly. It's rebounded pretty quickly, I would say that.

Speaker #5: Yeah. So. And, b-by the way, it doesn't have to be the bond market. We have multiple ways to finance this. you notice Bally's went and used, GLPI to finance there 'cause, you know, that's ways an option for us.

Speaker #5: We actually still have financing with a private equity firm that's pretty expensive. So we hope not to use it. But we do have it.

Speaker #5: Right? So w-we have, you know, other ways to do this. And, but we think the best route is, bond market. So.

Speaker #7: Makes sense. Thank ou.

Speaker #1: Thank ou. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker #1: One moment while we pull for questions. Our next question comes from the line of Ryan Sigdahl with Craig Hallam Capital Group. Please proceed with your question.

Speaker #8: Hey, guys. Good afternoon. This is Will on for Ryan. Wanted to hop back to Chamonix. You talked a lot about the cost savings, kind of that ou found and started to implement.

Speaker #8: Through the new GM and CMO, obviously, it's pretty early. Curious what changes you're making to the marketing strategy and how you think about maybe balancing the current client base in Chamonix versus the one you're trying to attract.

Speaker #5: Well, th-th I mean, there's a lot of things and frankly, the marketing director at the property just started work, a couple of days ago.

Speaker #5: Right? So he's still trying to drink from a fire hose. but the, but I'll, I'll give ou one simple example is, a big thick mailer every month that was pretty expensive to print and pretty expensive to mail.

Speaker #5: And had not done a very good job of getting emails of its customers. We've been avidly trying to get emails, and to put that in perspective here at American Place, we stopped sending physical mail a year ago, Jeff.

Speaker #5: And we only send email. It's way cheaper to only send email. And, put that in perspective, if you're sending out a, a mailing piece with some promotion in it that costs you, let's , a dollar to print it and mail it, and that would be a pretty low number with the cost of postage these days.

Speaker #5: If, if you get a 5% takeup rate, which would be, pretty normal for something like that, then it's costing ou $20 for a ustomer to take up your offer.

Speaker #5: If you do it in email, it costs you nothing. Okay? And, and frankly, what we found at American Place is the,

Speaker #8: The open rate.

Speaker #5: The open rate and response on email is just as good as it is with physical mail. And so, you ow, ma-making that transition and, and the, the, the person who was running the property was a very old-school.

Speaker #5: He would write a letter from him, about the whole ing. And, and, and even though we said several times we should get emails, we should migrate to emails, he really hadn't done it.

Speaker #5: We are now doing it. So that's just one example. There will I am confident that the new marketing team we hire, which has frankly amongst the group a lot of experience, I mean, we have, they're all new, but we have a stronger marketing team than any other casino company our size at this point.

Speaker #5: They're all new. Give them time. Right? And, and with time, we will, we will, we will do very well. In fact, the, a number of them came out of the, early Harris days where, where Gary Lubman ran the property.

Speaker #5: He was a professor of marketing at Harvard Business School before he became CEO of Harris. And really created the state-of-the-art marketing programs that, that Harris had.

Speaker #5: And, and the whole industry has been learning from that ever since. And so we're, we're, we're getting up to speed. But it's, , it doesn't happen overnight.

Speaker #4: I don't remember the stat, Dan. You may. The n the, the current ad campaign, I believe, will touch 80% of Colorado Springs on average four times.

Speaker #5: Something like that. Yeah.

Speaker #4: I-it

Speaker #4: 't, don't quote me on those ex-exact numbers, but they're, 're, they're pretty much in that ballpark. It's, I mean, keep mind, I think a lot of people forget this.

Speaker #4: We weren't fully open. So effectively, we've only been open since October of last year. We've effectively only been open for, you ow, whatever that is, 10 months whatever it is.

Speaker #4: So, you ow.

Speaker #5: And, and, and frankly, part of the issue we had going through the winter was when you say fully open, we have a spa that's open every day.

Speaker #5: We have a jewelry store that's open every day that wasn't a year ago at this time. And when you're, when your hotel's v-very low occupancy, midweek, you're losing money on that.

Speaker #5: Okay? So as you improve occupancy, everything, so it's, like the lowest point in income was this past winter. When you had all the expenses of operating all that stuff and not enough revenues.

Speaker #5: And, and now we're, we're getting, smarter about it in many ways.

Speaker #4: Yeah.

Speaker #5: but it, it, it doesn't happen overnight, but it is happening. So, the cost savings happen like started right way. And, and it's getting

Speaker #4: Yeah.

Speaker #5: better. We're, we're ally, in the market for a new, finance director, to help get better re better, handle of our own results, so we can focus in better on even more cost savings.

Speaker #5: Okay? but, so the cost saving, cost savings are kind of easier to figure out. to improve the marketing and get results takes longer.

Speaker #4: We've got one other benefit. It's, it's almost, maybe a little fuzzier, but, you know, we over the years, we've accumulated these different casinos in, in Colorado.

Speaker #4: And, and they're all adjoining, and you never walk outside. But, but we have three different casino licenses throughout Chamonix Bronco Billy's. And what we've been focused on for the last several months is effectively wh-wh-where it's a customer hindrance is if you cash out in one of the licenses and then take that ticket up to another license, you can't use it.

Speaker #4: And we have people that do that. They, think the machine is broken because the Tito ticket won't work from one machine up, up the stairs into another machine.

Speaker #4: the, the other piece that, that, that w-where we don't benefit is because we have three different licenses, we have to have three different cages open.

Speaker #4: And so what we're expecting sometime in the fourth quarter, hopefully, at one point, we thought it was going to be mid-October. I don't know if, if, if we'll quite get all the approvals by then, but we do expect to be in beta testing here relatively shortly, to effectively unify, that Tito system where you can use that Tito ticket in any of our three licenses.

Speaker #4: We'll only have to have one casino cage open. And if you think about cost savings all over again by having one cage instead three cages open 24 hours a day, it's something like 700,000 dollars a year in savings.

Speaker #4: On top of a much, much better, customer experience. And, and, you know, think it. If you're a high-end customer, especially, little hindrances like that are just a pain in the butt.

Speaker #5: And by the way, this is something, our new GM, Brandon, had put the, the Tito tickets being a bit, usable in all three licenses.

Speaker #5: He, at one point, ran the Bally's properties in Blackhawk, and he was able to get the regulators to approve that. at their property. Now, they use a different, slot system than we do.

Speaker #5: We have the Konami system. So, but Brandon, earlier in his career, had actually been a regulator with Ontario Lotteries, dealing with slot machines. So he knew how to talk regulatories if you will.

Speaker #5: And, and so he's working with Konami to get the system changes in place, to satisfy they're very focused on making sure the taxes are paid appropriately.

Speaker #5: Well, if you modify the systems right, you can make them comfortable about the taxes. The consolidating into one cage hasn't been done before we think we can get there, but that's less certain than the Tito tickets.

Speaker #5: Tito tickets are a big thing for the customers, though. And, and so, the o the other thing I would tell ou is, anybody on the call, if you haven't been to Crypple Creek, you really should go and see it.

Speaker #5: You, you it, it makes you feel a lot more comfortable when you see the property. But those who have been there and met with the new management, some of them had been there with the old management.

Speaker #5: And they get it. It's like, okay, this, this new management's pretty smart, and they're working the right way. And, and so on. So, that, not, not, not, not to, you know, overplay it, but, you know, if you, if you go and visit the property and we're happy to set it up for anybody, you'll understand better why we have confidence that this will be successful.

Speaker #4: Hey, Dan, we as, as sorry, I didn't, I didn't mean if you another question, feel free. I was going to say to Dan, we have time for maybe one more after you, but feel free if you have something else there.

Speaker #8: I was just going to ask on the legacy properties. I think Verizon Star, at least according to the state gaming data, had its first, I think, year-over-year growth in a little while.

Speaker #8: So curious if there's anything to note there on the legacy properties. That's all. Thanks, guys.

Speaker #5: Now, we have a, a GM there who's been with us almost a year now. And he's been making little improvements here and there. And yes, we did just show a little increase in, and, it's a challenging property because of the, competition every direction from us.

Speaker #5: Most recently, the Churchill property in northern, Kentucky and, but we have our own little niche and we're working on it. We're never going to make a lot of money at the property.

Speaker #5: we, we, we, you know, but it, it does make money. if we could find a way to relocate it, it would be a, a, a much more profitable business for us.

Speaker #5: we've ally told the town we're in that we would pay them more in taxes than we pay them today. Even if we relocate it.

Speaker #5: And we think it would be very positive for the state. but it's a long process to get state approval to relocate a license, and it's never a certain process, but it's ething we're, we're working diligently on.

Speaker #5: And, and we think it's a win-win. So if everybody was rational, it should sometimes in these cases, they're not rational. But the property itself, I mean, it's, it's a big footprint.

Speaker #5: happen. our. I think our, I

Speaker #5: It's, it's, 300-room hotel. 18-hole golf course. traditional casino riverboat. But one the nicer ones that's out there, the boat is actually quite, has some charm to it, has a nice decor to it.

Speaker #5: And a pavilion with a restaurant, meeting room space. So it's a big footprint. it's just geographically challenged. when it opened, it was the only casino in the region, and it did very well.

Speaker #5: And today, it's the oldest casino in the region. And it's got newer competition every direction. So. But

Speaker #4: Thank you both. But

Speaker #5: think our team, our th-th-think our team is doing a good job. And tough circumstances to, to keep it going. So.

Speaker #4: Probably time for just one last question, Dan.

Speaker #5: Yep.

Speaker #1: Okay. Our last question comes from the line of Ricardo Chinchilla. With Deutsche Br Deutsch, I'm sorry, Deutsche Bank. Please go ahead with your question.

Speaker #9: Hey, guys. thank you. Hey, guys. thank ou so much for squeezing me in. I was hoping if you could comment a little bit on the cadence of the quarter in terms of, you ow, revenues and, you ow, when thinking about July, you know, in terms , like, sequential improvement, you just give us, like, you ow, some sense of how business has been evolving.

Speaker #5: Well, I mean, at American Place, it's just been rock solid up every single month. For two years now. And both revenue and, and EBDIT.

Speaker #5: And that's continued into July as we said earlier. at Crypple Creek, we've been very focused on pulling together a new management team and helping them get going.

Speaker #5: And, you know, and, and cost savings initially, hiring people, still a couple of positions we need to fill. And, and now focusing on building revenues.

Speaker #5: 'Cause ultimately, we need to build the revenues to get a return on our estment there that would be acceptable. And then, h.

Speaker #4: And just to be very clear, J and July improved from what we saw in the second quarter, just to be very clear.

Speaker #5: Yes.

Speaker #4: At Crypple Creek. Yep.

Speaker #5: Yep. And then in, you know, as we mentioned at, the Silver Slipper, we actually the, the we've had a new GM there too, also for, seven or eight months.

Speaker #5: And she, is very experienced from our Indiana property. And she said that, there were a number of people who were basically being overcomped. And we weren't making money on them.

Speaker #5: So the we expected revenues to be off, and EBDIT would have been flat except for a non-cash accounting charge we had to take. And, but it, it, it's, it's doing well.

Speaker #5: I ink it'll end up the year, comfortably up. I think last year, EBDIT was like 12. It'll ably end up around 15 this year.

Speaker #5: and that's, you know, taken into consider-consideration how we did in the first half and, and if it's not quite 15, it'll be close. And then, and then we talked about the Hyatt, you know, that, that we're actually doing pretty well considering how much of the property has been closed for its refurbishment.

Speaker #5: And, and, and we'll, I think, do fine. And then the new GM we have there is very much kind of a, player development sort of personality.

Speaker #5: And, and that's quite a bit different than the, the management team we've had in the . We had their own strengths. But I, I expect Tony to be the sort of guy who goes out and finds high-end customers who will want to come to Lake Tahoe.

Speaker #5: And, rather than just somebody checking into the hotel who might want to gamble, in other words, being a little more proactive to build their list, he's that sort of person.

Speaker #5: And I'm optimistic that that will show results again, not immediately, but over time. I think that,

Speaker #4: Dan, this is all of them.

Speaker #5: So it listen, not a great quarter. We're working hard. actually, great quarter for American Place, which is the important one. That's the

Speaker #4: Record.

Speaker #5: arter, Dan. Yeah, but that's the

Speaker #4: Right.

Speaker #5: one where we're going to build the permanent next door. And of course, that's, that's at this point, the biggest part of the company. Crypple Creek is a turnaround at this point.

Speaker #5: We're working on it. we'll get it turned around. We know how to do it. We have a team to do it. and the rest of the company overall is stable to, you ow, I, I mean, I ink we're going to continue to have our challenges at Tahoe because of what's closed, but it's pretty small in grand scheme of things.

Speaker #5: And, the Silver Slipper is actually trending up in general. this quarter didn't look that way. because of the accounting charge, but, but in general, it's, it's on a positive track as well.

Speaker #5: So. And, nobody asked whether we'd rather buy Maverick or Century. And the answer is we're etty busy these days. So it's, sorry. just wanted to wake Louis up there.

Speaker #5: But, we're pretty busy with what we do. If we just accomplish what 're doing, we'll be fine. So. Thank ou.

Speaker #1: Thank you. This now concludes our question and answer session. I would like to turn the floor back over to Louis Fanger for closing comments.

Speaker #10: That was oh, well, D-Dan just said it. So thank you, everyone. We'll, we'll, 'll, we'll, we're excited to talk to you next quarter with, with some more progress.

Speaker #10: And hopefully, more record quarters here at American Place.