Full House Resorts, Inc. 2026 Q2 Earnings Call

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 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. 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. Lastly, we're also broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release, as well as all of our SEC filings. With that said, we're ready to go, Lewis.

Good afternoon, everyone. We had a strong quarter of growth led by our two newest properties, American Place and Chamonix. On a consolidated basis, revenues grew 5.6% in the second quarter. Adjusted EBITDA increased 19.5%. That growth was led by American Place, which once again had its best quarter ever. I feel like a broken record when I say that, since we've said it so many times. Get used to it because we expect to say it quite a few more times in the future. Revenues at American Place rose 13.4% to $34.8 million. That compares to revenues of $30.7 million in last year's second quarter. Adjusted property EBITDA at American Place rose by 13.8% to $10.1 million, up from $8.9 million in last year's second quarter. Prior to the second quarter, we had never crossed $11 million of monthly gaming revenue, much less $12 million.

In May of 2026, we crossed both of those thresholds, reaching $12.7 million. Our temporary American facility has seen consistent growth since it opened. We fully expect that growth to continue even in the temporary facility. In the month of July, we continued to grow. While I don't believe the monthly gaming revenue reports are out quite yet, it was our second-best gaming revenue month ever. Historically, the second half of the year is even better than the first half. At Chamonix, you may recall that we changed marketing agencies late in the fourth quarter and onboarded them in the first quarter. In the second quarter of 2026, with that new ad agency, we launched new, more targeted marketing strategies, made changes to the offers that we send to our guests. Revamped our overall branding, especially on social channels.

Those efforts helped revenues rise almost 12% in the quarter. Adjusted property EBITDA was approximately break even for the quarter. We augmented our casino host team recently, adding 2 more people to that group. A few weeks ago, we added a new casino director with experience at higher quality casinos, having worked at Fontainebleau for 2.5 years and at Wynn in Las Vegas for almost 15 years. As we continue to refine our casino host program and build our high-end business, his experience will be useful to our Colorado team. One stat that I think continues to show the available opportunity in Colorado is win per position per day. For Black Hawk as a whole, that statistic was about $330. We estimate that Monarch, the only other high-quality casino in the entire state, is maybe twice that or north of $600.

At Chamonix, we're currently at about half the Black Hawk average. In the near term, our goal is to improve our win per position per day figure of about $175. If we can hit the Black Hawk average and get 70% EBITDA flow through, that results in roughly $30 million of annual EBITDA. If we can get a 15% premium to the Black Hawk average, which would still be a massive discount to Monarch, you approach $40 million of EBITDA. We're not there yet. We don't expect to be there this year or even fully there next year. We do expect to make massive improvement over the coming 18 months. You get there by filling the hotel, which still has significant capacity midweek, and continuing to add names to the database.

As an example, we define a VIP guest as someone that generates more than $150 of gaming win in a visit. In the month of June, the strongest part of our database was that VIP group. Leading the growth for all of our rated play was our top segment that spends $750 or more on our gaming floor in a single trip. Our second-best growth segment was the $350-$749 group. Our third best performing segment in our rated database was the $150-$349 group. We are seeing better guests visit Chamonix, and we're seeing them return, in part due to our evolving marketing efforts and expanding database, increasing awareness, and a high-quality product that we built. At our other properties, just a few quick notes. Rising Star was impacted during the quarter by a 42-hour power outage due to a downed power line. As we said last quarter, we tried to move that gaming license to the Fort Wayne area.

We weren't successful with those efforts, which was disappointing, we are pretty busy anyway with the construction of our permanent casino in Waukegan. Rising Star does make $several million a year of EBITDA, and we will continue to operate it at its full potential. At Silver Slipper, revenues declined slightly as we continue to eliminate unprofitable business and adjusted property EBITDA slightly improved. We think there's room to improve operating profits at Silver Slipper, including related to controlling food waste at our high-volume buffet, and we're studying things like that in real time. In Lake Tahoe, our Grand Lodge Casino is located within the Hyatt Lake Tahoe. The renovation of that Hyatt continues to disrupt our casino business in the near term, the resort should be spectacular once complete.

Work on the cottages and the restaurant across the street, as well as access to the resort's beach, is expected to be complete in late 2027. Regarding our financing, we completed several important items since our last call, all of which were necessary prior to completing a new debt transaction. The first was the passage of a legislative bill allowing for temporary casinos to operate for a longer period of time. As this bill involved the state legislature, it was a once-a-year process that could only be done when the legislature was in session. That bill was passed in May 2026, though the bill also required approval, or actually required us to request and receive approval of an extension from the Gaming Board. We were granted that Gaming Board approval in June 2026. As a result, we are now permitted to operate our temporary facility until February of 2029.

As February of 2029 is beyond the date that we expect to complete our permanent casino, there should be minimal downtime when we transition operations from our temporary to our permanent facility. With a new timeline and more refined construction plans in place, we approached the City of Waukegan for approval of an amendment to our development agreement. As one example, our original development agreement required us to tear down our temporary facility shortly after opening. Rather than do that, we wanted to maintain the Sprung structure for trade shows and use as an entertainment facility. It has bathrooms, bars, and an expansive footprint, so it is well suited to the task. Amongst other things, the approved amendment with the city, lets us retain our temporary facility for five years to see if it makes sense to eventually add a permanent mixed-use facility to our footprint.

We also adjusted the dates in our development agreement. Lastly, we know everyone is eager for us to complete the refinancing. We are obviously as well. It's a pretty complicated transaction because we are simultaneously refinancing our existing bonds, financing the construction of a permanent casino, and closing on a new revolving credit facility. While we are not completely through the legal paperwork for that financing, we moved through a large portion of it. The new revolver is more or less complete at this point, with commitments from four different banks, and the paperwork is largely done. All parties continue to work diligently on the balance of the rest of the documentation, and we'll give you more detail once we can. We hope and believe we can get this done in the third quarter.

What I missed, Dan? No, I think you did a good job.

I'm going to address a couple of things because I addressed it a little differently than Lewis did. We used to report on each property, and a few years ago, we switched to be like most casino companies, where we group them together. Sometimes that masks how well results actually are. In this case, you'll see the Midwest segment up 4.7% in EBITDA. American Place on its own was up almost 14%. Rising Star had a storm that took down a power line. We're kind of at the end of the power grid, and it took them 42 hours to get us back up. Rising Star, instead of making half a million like it did last year, actually lost $100,000 in the quarter.

That masked how good the quarter was for American Place. Silver Slipper, which is still our number 2 property, it's really the third leg of the stool. It's a cash cow. It did $3.4 million in the same quarter of both years. Because it's in that segment and doesn't grow, we think we can grow it, but it's basically a cash cow, it brings down the percentage. The most important one is American Place. It's our number 1 property. It's the one where we're building a new one, it did really well, a flat Silver Slipper a down Rising Star camouflaged that a little bit. A little bit of the same in the West segment. While we improved results by $1.2 million in American Place, we improved results by $1.1 million at Chamonix.