Casino revenues for the quarter increased by 5% compared to the prior-year period, primarily the result of a more favorable slot hold percentage at Stockman's Casino.
Full House Resorts (NYSE Amex US: FLL) today announced results for the three and six-month periods ended June 30, 2009. Net income for the three months ended June 30, 2009 was $0.2 million, or $0.01 per common share, compared to $33,343, or $0.00 per common share, in the prior-year period.
Second Quarter 2009 Highlights and Subsequent Events
• FireKeepers Casino opened its doors to the public on August 5, ahead of schedule and under budget. The property located off Exit 104 on Interstate 94 in Battle Creek, Michigan features 2,680 slot machines, 78 table games and a 120-seat poker room. In addition, the property has five restaurants, a parking garage with 2,080 spaces and additional surface parking. Since its opening, the property has been experiencing high levels of visitation consistent with our expectations. Full House Resorts, through its 50/50 joint venture Gaming Entertainment (Michigan) LLC ('GEM'), is the manager for the casino and supervised development, design and construction for the Nottawaseppi Huron Band of Potawatomi. GEM will now manage the daily operations of the casino for the FireKeepers Development Authority, an agency of the Huron Band, and will be paid a management fee equal to 26% of pre-management fee income over a seven-year period which commenced with the opening on August 5th.
• Casino revenues for the quarter increased by 5% compared to the prior-year period, primarily the result of a more favorable slot hold percentage at Stockman's Casino. Food and beverage revenues for the quarter were down 17% from the prior-year period due to the generally weak economy and increased competition. Continuing expense reduction efforts, coupled with lower food and beverage activity, resulted in lower costs at Stockman's. As a result, EBITDA at Stockman's increased from $0.6 million to $0.9 million.
• As of June 30, 2009 the company had cash and equivalents of $4.5 million, debt of $4.4 million - of which $3.5 million is an obligation of GEM - and availability on the company's credit facility of approximately $7.9 million.
'We are extremely excited over the successful opening of FireKeepers Casino last week and while we were pleased that we were able to maintain profitability in the second quarter in the face of a continued difficult economy, we continue to be vigilant in controlling costs and deploying marketing dollars carefully,' said Andre Hilliou, Chairman and Chief Executive Officer of Full House. 'The construction of FireKeepers came in ahead of schedule and under budget despite increasing the number of slot machines and parking spaces from the original plan. Traffic at the casino is currently at capacity levels and we are pleased to announce that we opened the doors with over 60,000 customers already in our Red Hot Rewards Club. We look forward to a mutually beneficial partnership with the Huron Band as FireKeepers takes its place among the top destinations in Michigan. Furthermore, we continue to generate free cash flow, while the Company continues to have no significant current debt repayments or maturities, putting us in a strong position to take advantage of acquisition opportunities going forward.'
Second Quarter 2009 Results
For the quarter ended June 30, 2009, Full House reported casino, food and beverage, and other revenue of $2.4 million, essentially flat with the prior-year period, as higher casino revenue at Stockman's Casino caused by a more favorable slot hold percentage was offset by lower food and beverage revenue due to general weakness in the economy and increased food and beverage competition.
The Company recorded equity in net income of unconsolidated joint venture and related guaranteed payments of $0.8 million, a decrease of 19% from the prior-year period. The equity in net income of unconsolidated joint venture represents Full House's 50% ownership interest in Gaming Entertainment (Delaware), LLC ('GED'), a joint venture between the Company and Harrington Raceway, Inc. The Company expects to continue receiving a 5% increase in distributions over the prior year from GED. The reduced income is attributable to the decreased net income of GED which the Company recognizes under the equity method. GED's reduced net income is mostly attributable to increased competition and higher costs, including recently enacted tax increases.
Operating expenses for second quarter 2009 were $2.9 million, a decrease of 14% from the prior-year period, primarily due to lower SG&A expenses, as well as lower casino and food and beverage costs.
Operating income, excluding impairment loss, for second quarter 2009 was $0.4 million, compared to operating income, excluding impairment loss, of $0.03 million in the prior-year period. The 2009 results include an unrealized gain on notes receivable from tribal governments of $40,022, compared to a loss of $0.1 million in second quarter 2008, primarily due to the opening of FireKeepers Casino on August 5.
The Company reported net income attributable to the Company per common share of $0.01 for the three months ended June 30, 2009, as compared to $0.00 for the three months ended June 30, 2008.
Six Month 2009 Results
For the six months ended June 30, 2009, Full House reported casino, food and beverage, and other revenue of $4.7 million, compared to revenue of $5.0 million in the prior-year period, primarily as a result of lower food and beverage revenue at Stockman's Casino due to general weakness in the economy and increased competition.
The Company recorded equity in net income of unconsolidated joint venture and related guarantee payments of $2.1 million, a 5% decrease from the prior-year period. Management expects that 2009 full-year results for GED will be lower than the 5% guaranteed increase due to payment timing variances which resulted in greater than an 8% increase in 2008. The reduced income is attributable to the decreased net income of GED which the Company recognizes under the equity method. GED's reduced net income is mostly attributable to increased competition and higher costs, including recently enacted tax increases.
Operating expenses for the six months ended June 30, 2009 were $5.8 million compared to $6.4 million in the prior-year period, primarily due to continuing expense reduction efforts throughout the organization and lower food and beverage costs.
Operating income, excluding impairment loss, for the six months ended June 30, 2009 was $1.3 million, compared to operating income, excluding impairment loss, of $2.6 million in the prior-year period. The 2009 figure includes $0.3 million of unrealized gains on notes receivable from tribal governments compared to $1.8 million in the prior-year period, with the year-over-year decrease primarily due to the repayment of $9.3 million of notes receivable related to the FireKeepers Casino, in connection with the FireKeepers Development Authority obtaining financing for the project in the prior year.
The Company reported net income attributable to the Company per common share of $0.04 and $0.06 for the six months ended June 30, 2009 and 2008, respectively. Excluding the asset impairment charges in the first half of both 2009 and 2008, and exclusive of the one-time gain on notes receivable in the first half of 2008 due to the repayment of the tribal receivable, net income attributable to the Company per common share was $0.04 and $0.03 for the six months ended June 30, 2009 and 2008, respectively.
Liquidity and Capital Resources
As of June 30, 2009, the company had $4.5 million in cash and approximately $7.9 million of availability on its revolving credit line with Nevada State Bank. Debt outstanding as of June 30, 2009 was $4.4 million, of which $3.5 million is an obligation of GEM. The Company has no required principal payments on its Nevada State Bank facility until 2021.
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