Good day, and welcome to the Full House Resorts Inc. First Quarter 2012 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Bill Schmitt of ICR. Please go ahead.

Thank you, Cynthia, and good morning, everyone. By now, you should have access to our earnings announcement and Form 10-K which was filed yesterday. These may also be found on our website at fullhouseresorts.com, under the Investor Relations section. Before we begin our formal remarks, I would like to remind everyone that part of our discussion today may include forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks that could impact the future operating results and financial condition of Full House Resorts. I would now like to introduce Andre Hilliou, Chairman and CEO of Full House Resorts. Andre?

Thank you, Bill. With me today on the call is Mark Miller, our Chief Operating and Chief Financial Officer, who will discuss the financial results for the first quarter. It was another newsworthy quarter at Full House, as we celebrated the first anniversary of our ownership of the Rising Star Casino Resort which has surpassed expectation, generating over $11 million in adjusted EBITDA since we closed on the purchase on April 1 last year. We also completed the sale of our 50% interest in GEM and the FireKeepers management agreement for $48.75 million plus a windup fee, and used a portion of the proceeds to retire our debt. That sale enabled us to immediately announce our agreement to acquire Silver Slipper Casino in Hancock County, Mississippi, which is expected to close in the third quarter of this year, and we further our transition from a management company to an owner-operator of strong locals-oriented casinos. It is an extremely exciting time at Full House, and we continue to move forward with our long-term strategy. As a note, last week we obtained lending commitment for the funds needed to purchase the Silver Slipper, moving us another step closer to closing. For the first quarter of 2012, our revenue numbers exceeded expectation with strong result at the Rising Star, solid result from our Grand Lodge and Stockman's Casino in Northern Nevada and a $500,000 contribution from our Buffalo Thunder management agreement. In addition, for the quarter, we generated adjusted EBITDA off the GEM sale of $4.9 million compared to $4 million in the prior-year period, in spite of not having a contribution from our Delaware management agreement which expired in August 2011. At the Rising Star, for the quarter, we generated revenue of $20.6 million (sic) [$22.6 million] and EBITDA of $3.1 million,…

Thank you, Andre. I will review a few highlights of our first quarter 2012 financial performance and condition before we respond to questions you may have. For the first quarter ended March 31, 2012, earnings per share was $1.38 compared to $0.09 in the prior-year period. Absent the $40.8 million gain on the sale of our interest in GEM, as well as a $1.7 million pretax loss of the debt extinguishment from retiring our debt in the first quarter, and excluding $500,000 of acquisition costs in the first quarter of 2011, earnings per share would have been $0.03 cents in the first quarter of 2012 versus $0.11 last year. As we have discussed previously, prior-year period results included $1.5 million in equity from our Delaware management contract which expired in August of 2011. First quarter 2012 and 2011 results were based on a weighted average common shares outstanding of $18.7 million and $18 million, respectively. Net income attributable to Full House was approximately $25.8 million compared to $1.6 million of net income in the first quarter of 2011. Excluding the aforementioned unusual items in both quarters, net income would've been $5 million -- $500,000 in the first quarter of 2010 compared to $1.9 million in the prior-year period. Our fourth full quarter of operations at Rising Star saw us generate revenue of $22.6 million and EBITDA of $3.1 million, inclusive of the maritime exemption which was implemented in mid-October. EBITDA margin in the quarter was 13.7%, and for the full year, we have owned the property, it was just under 12%. The property continues to run ahead of our internal forecasts and has generated adjusted EBITDA of approximately $11.1 million in the first year that we have owned the property, well ahead of the $8.5 million we based our $43…

Thank you, Mark. We are once again pleased with the solid result we achieved in the first quarter, as well as the significant milestone of our sale of the GEM management agreement and our announcement of the acquisition of the Silver Slipper Casino. In the beginning of 2011 until today, in just 16 months, Full House has transformed its operation almost completely. And we're not finished by any means. We will continue to pursue management contracts and acquisition to further grow the company and its value. Thank you and I will now open up the call for questions.

[Operator Instructions] We will take our first question from Mark Argento with Craig-Hallum Capital.

You guys have 2 acquisitions so far, including now an owner-operator of casinos. If we take a 5,000-foot view of your business over the next 3 to 5 years, would you consider -- or how do you see the business kind of rolling out in terms of growth? Is it more local type casinos like the ones you've done so far? Is it just more of them? Or are you looking over time at potentially expanding more regional type of properties? How do you see -- what does Full House look like in your opinion 3 to 5 years out?

Mark, I think we, so far, we like the way we are proceeding. Of course, we are opportunistic as most businesses are. I think that we, over the next 4 to 5 years, we like the path that we are going on, strong local casinos and management contracts. But we are going to keep on that path. But if something comes up that we think will add value to Full House, we surely will look into it very carefully. So a extended Full House as you see it today will be the Full House of tomorrow.

In terms of pace of acquisitions, you've got the Rising Star, now you've owned that for a year, operated successfully. Now -- Silver Slipper now, about a year later, of course, making that acquisition. I know you've been somewhat constrained by just capital. Would you look to see the pace of acquisitions start to pick up? Could you see do in a couple -- in a 12-month period if you could find the right properties? I guess what I'm trying to get my hands around is are you constrained from a people perspective or are there anything, any reasons why we couldn't expect you guys to really start to get after it here?

Well, we are very conservative, as you know. And from the people perspective, I believe we can find people to grow. But I think, we -- it is a big acquisition for us, the Silver Slipper. So we want to make sure that we bring the Silver Slipper successfully to the Full House family as we did with the Rising Star. So we are always looking for the acquisition, but we want to make sure that we base the company on a strong foundation. It's kind of hard to predict the environment.

I would just add to that, that I think with Silver Slipper and potentially a hotel at Rising Star, we do have some organic growth opportunities that we want to pursue. And I think that's going to take up some of our time and resources, at least in the immediate near term.

And just last question, with...

Yes, both entities, regardless.

Sure. Last question on -- with the economy looking like it's maybe found a level here firmer footing, are you starting to see any increased activity, any kind of changes in multiples in terms of the pipeline of properties for sale?

Not really. I think folks who want to sell their properties, some owners are really not casino operators and they decide to sell for various reasons. So I think that we've seen the bottom line stabilizing, the multiples stabilizing, but there are still properties for sale, for sure.

[Operator Instructions] And we'll take our next question from Aman Mahal with Henderson.

Just a question on the Rising Star Casino. It's obviously, sort of your comments and your last presentation regarding expected new entrants into that market. Can you give me a bit more of a sense of what you're expecting in terms of your own revenue impact to those projects coming onstream?

Mark, go ahead.

Well, we haven't provided any specific guidance on this issue, but we do expect that the casino in Cincinnati will open Q2 of next year. And as we've indicated in the past, we think that the customer base that it will be most attractive to is not really the same customer base that we are seeing at Rising Star. So we do not expect a huge impact from the Cincinnati casino. The racetracks in Ohio continue to be pursued but on a slower pace than we originally expected. And so at this point, it's a little bit unclear as to when those will open.

And when you say they are totally different customers, can you expand on the different types of demographics there or different types of customer profile in terms of who your customer is and who you'd expect to those competing in the racetrack[ ph] ?

Well, I think the casino in downtown Cincinnati is likely to be -- their customer base is likely to be more younger and closer into the downtown Cincinnati area. Our customers tend to be older, suburban, and frankly are probably looking for a less active, less noisy, if you will, a quieter type of environment. And so, we really just think that there's sort of, going to be different customer bases at this stage.

All right. And then just a second question actually. Looking at your acquisitions over the last 1.5 years, you've made some fantastic acquisitions when in terms of the multiples you paid for these and what you've been able to do. Can you -- while they look amazing from your perspective, I'm just trying to understand if the sellers are of these assets and why they're selling them, essentially? Can you just give me a bit of sense of any of the distressed assets you bought? Are they, in terms of leveraged sellers, is that a -- is it sort of succession in just of owner-operators are looking to -- I just be -- put to get a bit of sense of where you've won these assets and how you're getting such good prices on them.

I think you have various reasons for it. You have sellers who want to exit the properties. You have what I call, are natural owners, folks who have owned casinos and for various reasons want to put them in the market. And the properties that we are looking at is that $8 million to $15 million EBITDA and number of buyers and not as extensive as you would see in the $20 million, $30 million, $40 million EBITDA neighborhood. So I think that we are really in a market that we understand well, where we have the ability to finance, we have the ability to manage, and the competition isn't as intense as it would be someplace else. And to further the question from Mark, we believe that some of those properties will come on the market in the future, near future or far future, and that it is a great environment for us.

And I just had one third question as well if that's okay. Just in terms of the cost of financing, $0.08 seems quite a high yield essentially for what was essentially an asset backed lending. Can you explain -- is that typical? I would have not expected it to be in a couple of percentage points lower than that, I'm like being incredibly optimistic.

Well, I think that the first lien part of this facility will be significantly cheaper. The issue is in the credit markets in terms of traditional bank financing, the debt is still very cheap. But their thresholds for leverage are very low and that required that we go to the sort of the second lien market to fill out the credit facility. We're not quite big enough yet to access the high yield market. And so, we're pretty [Audio Gap] given the size that we are. It's pretty consistent with what we paid when we did the Rising Star transaction, maybe slightly more expensive. But really, I think as the company grows, you get a little bit bigger problem, another acquisition and we'll be able to tap a high yield, more traditional high-yield market to finance some of these acquisitions.

We will take our next question from Greg Weaver with Invicta Capital.

Just some background color, if you could here. Would you characterize Silver Slipper as a fixer-upper? I mean, that hasn't really been your style historically. But I'm just trying to get a sense of the current profitability in term of the room for improvement there?

The property is actually a new property. That's one of the reasons why we purchased the property. It's really a new property and it's certainly not a fixer-upper. It's quite nice.

I guess maybe, sorry, I meant the -- in terms of maybe management or room for improvement in terms of how the property is managed as opposed to the facilities himself.

Well, we like the management team, as we did like and as we do like the management team at the Rising Star. And I hope that by bringing new outlook on marketing, we will be able to improve the property as we did at the Rising Star. But the management there is quite qualified. We are very satisfied with what they've been doing so far. And we think they're going to fit well within our organization.

The real growth opportunity, Greg, here is the hotel. As you know, the property does not currently have a hotel and its competitors do. The market is room constrained. And so we think that there is a significant opportunity to move the property forward with the addition of a hotel. And we haven't decided yet exactly what we're going to build or when we're going to build it, but we'll be turning our attention to that as we get this, the transaction, in hand. But that's the real attractive part of this acquisition for us is the opportunity to add a hotel and, we believe, a favorable multiple.

And in terms of -- for comparables, right. So Boyd about the Imperial Palace and I guess, Golden Nugget bought the Isle's property, any sense there in terms of kind of where you guys shake out relative to what they paid in terms of multiples of EBITDA?

We've said publicly, Greg, that we paid a little under 6.25x.

Okay. That's helpful, I didn't -- okay. And just in terms of the competitive landscape, who would you consider your most relevant competitive property? I guess Hollywood is the closest one, is that right?

That's correct. When you come out of Louisiana, we're the first property you come to, we're about 20 or 30 minutes from Slidell. And then another 20 minutes down the road, you come to Hollywood, and then another 20 or 30 minutes into Gulfport.

And the folks from Louisiana don't tend -- the ones you're attracting, even though that there's casinos there that are closer drive, they prefer to come out to your way because?

Again, I think it's the same thing that we've talked about with the casino in Cincinnati. I think the demographic and the people who are going to downtown New Orleans to the casino there is just a different demographic, a different customer base than the people who are going to come over to the casinos in Louisiana -- or Mississippi, I'm sorry.

And at this time, there are no further questions. Mr. Hilliou, I'll turn the conference back over to you for closing comments.

We would like to thank everyone for being with us today. With that, we will end the call and wish all of you a great rest of the week. Thank you.

Ladies and gentlemen, this will conclude today's conference call. We do thank you for your participation.