Greetings, and welcome to the Full House Resorts Second Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lewis Fanger, President of Full House. You may begin.

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 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 captions Forward-Looking Statements for the discussion of risks that may affect our results. Also, we make reference to non-GAAP measures such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as various press releases that we issue. Lastly, we also are 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.

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. 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, we had record revenue. It was $30.7 million, up about 13%. And we also had record adjusted property EBITDA of $8.9 million, which was up 17%. I don't think the July gaming figures are out quite yet in Illinois, but rest assured, we had another very solid month of growth in the month of July. 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. One encouraging sign is the number of new sign-ups into our database, which recently crossed 107,000 people. And new sign-ups into the database continue at the same pace that we saw several quarters ago, 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. 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. 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…

Large deal publicly or privately.

Or privately, -- very true.

We keep watching for an opportunity, and I think that will come. As a practical matter, we're allowed to operate the temporary casino here at American Place until August of 2027. As long as we get underway with construction sometime this year, we can make that deadline. I think it's a practical matter 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. After all, we pay about $25 million a year in tax revenue and employ over 500 people. And we had to do that before with the Potawatomi lawsuit. I'm confident we could do it again. 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. 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.

A little more than a crack, a lot more than a crack, actually.

And -- but it's kind of a summer doldrum. So we're looking for an opportunity. But if we don't get it done, it's not the end of the world, 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. Yes. I think you mentioned July being strong. I mean, you did mention we expect to be up about 20% this year at American Place. July alone, I think, is probably up about 30%. So it -- we're doing pretty well. And then in Colorado, you mentioned that it's cash flow positive in July. Pretty clear it will probably be cash flow positive for the third quarter. And the goal is to keep cash flow positive thereafter, although it obviously gets more challenging as you went into the off-season. But I think with the changes we've made, management changes, we really -- at that property, it's a little different than American Place because it has a hotel and American Place doesn't. 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, and we end up losing money operating all these amenities in a hotel, it's not -- occupancy is low. The normal fix to that is to have a sales force that works for years in advance and helps fill it midweek with meetings and conventions and so on. Quite honestly, we've just hired that sales force. We had a salesperson who with hindsight, it was pretty ineffective, and we're hiring people now, and there's a lead time on that. And we'll eventually get there just like almost any casino hotel will fill midweek with meetings and groups and conventions and then the weekends are busy with gamblers.

That sales job, though, did get a lot easier. It's not easy to try and sell space or rooms before you ever open, before people can see what you've built. And I will say that at this point, it did get a lot easier.

And frankly, the icon I always look at is Monarch, who does very well in Black Hawk, which is a very similar market. And they do a very good job, and they have a nice property. I think our casino itself is actually nicer than theirs, and I think our hotel is pretty equivalent to theirs. They're bigger than us, but we're 60% their size. And they're a public company. They only have 2 casinos, that one and the one in Reno. 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 they make in Reno. And the bottom line is they make somewhere north of $100 million a year in Black Hawk. And it's like, wow, we're 2/3 their size. We're eventually going to be pretty profitable. In terms of meeting room space, we actually have far better meeting room space than they do. They're in a very constrained site. They don't have much meeting room space. They really don't have a venue to have entertainment. We do. And so I think we will do much better, but we've had some growing pains out of the box, and we're fixing that. That's, I guess it. I mean 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 to a key weekend while we fixed it. And most of the parking at that property is in the parking garage. So we were scrambling a bit to have valet parkers and everything. But we got through the weekend fine, and otherwise, the property is doing pretty…

Let's go into some Q&A.

[Operator Instructions] Our first question comes from the line of Jordan Bender from Citizens JMP.

This is Eric Ross. I'm on for Jordan. I was wondering what are some of the early factors we should be looking at to determine success and earnings ramp at the property in Colorado?

Well, we're already started by having the expense structure reduced and some of that was pretty easy -- just 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 staff is on a weekend, and that's when you're busy. And we shifted it, I believe, to Thursday. And the idea is that if you pull somebody in on a Saturday or Sunday and it's the end of the pay week, you end up paying overtime. 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. So it's just a simple 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. And so 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 trailing 12-month basis. And so the cost savings has begun and is already showing benefits. And there is some expenses of some of the people we've replaced get severance pay, and that's dragging us a little. But obviously, that ends at some point. And then now it's getting the marketing up. And just like at American Place, where we've built the mailing list and we target it properly and we work on it, it's a slow process. And there's --…

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, not simple product, 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, this is a brand-new Cripple Creek. And that is happening. I will tell you, when we look at our database, we, of course, look at all these different segments. The segment we're doing the best is the $750 and higher average daily theoretical win. That's our top-tier player. That player has embraced and continues to embrace the property. 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 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, yes, the offers you're giving me are as good as the offers I'm getting for Black Hawk. Your rooms are great, your property is great. I just haven't had a good player host that reaches out to me on a regular basis or whatever it is. And so part of our challenge is we need to make sure that we're cultivating the higher-end player. 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 a little more fishing in that world. And so we'll get there as the brand continues to become more out there.

Actually, the other comparison I just thought of is when I was part of the group that put together the Borgata in Atlantic City. And when it opened, the Atlantic City product at that time had gotten pretty dated and not particularly good. The Borgata was a completely different type of product. It took a little while for people to recognize that the Borgata was better than the product that had previously existed. And now 20 years later, the Borgata has been very successful. So sorry, long-winded answer to your question.

No, great. And just another follow-up on Colorado, if you guys could provide any color around convention mix or bookings and what the Chamonix is looking like heading into the summer, that would be great.

Summer for us really tends not to be the group business time. It's really heading into the winter months. I think Dan mentioned we just hired a brand-new group director, literally, I think today. So stay tuned. But look, the facility itself now is open. It's beautiful. People that are booking groups are not worried about if the place will be open on time. All this stuff, all the problems you have before opening have largely gone away. There's still some lead time because some of these groups will plan a year in advance or 6 months in advance. And so it doesn't necessarily happen overnight. But I will say we have people now in that group department that we're happy with, and I think they're going to do a very good job. So probably a better question to ask us in another quarter.

Yes. The summer, we're doing much better occupancy, but it is the summer in the mountains of Colorado. But back in the first and second quarter, there were some midweek days where occupancy was very anemic, and we're hoping to not have that as we go into the off-season this fall.

Our next question comes from the line of Connor Parks with CBRE.

I guess, first, popular discussion this earnings season has been around the Big beautiful Bill and the impact to gaming and around regional gaming. I guess can you provide an update or maybe thoughts overall on the potential impact to your customers in any market, any database, whether it be no tax on tips or senior impacts, that would be great.

I think to the extent that any of our customers have more money in their pockets, it's always a good thing. And so to the extent you have reduced taxes, whether it be on tips or tax rates that don't go up or whatever it is, that's ultimately beneficial around our seats. The one thing you might not be thinking of is we do have NOLs, net operating losses that we continue to build up on -- well, just try to continue to build, I should say. And part of the changes in that bill actually benefit us. The -- if you would have asked me 6 months ago when we expect to work through all of our NOLs, I would have told you maybe by the end of 2029. And these days, I think it's probably not until the end of 2030. So I think we have the ability to accumulate NOLs, even more NOLs than we would have under the old tax plan and fewer limitations on their use.

And I should mention, we get on a tax basis, we get accelerated depreciation on these new properties, which is part of what builds the NOLs. So it's a noncash charge that results in cash savings on taxes is kind of what it really is. And that's a good thing. And the other thing is no tax on tips to the extent a lot of our employees receive tips, it probably will put less pressure on us when people are seeking raises. And it's like, well, your income after tax is up quite a bit. So I think if people are feeling more money in their pocket, they're less like -- I say this, I'm sure I have employees listening, but like hardly a day goes by, I don't have somebody ask for a raise. And now I have something to push back on.

Helpful. Shifting gears to Waukegan and the plan there. Helpful color on how you're thinking about the time line and the update on financing. I guess working backwards from August 2027, I guess at what point must you go into the regulators for a request for an extension? Or what point might you start thinking about that more seriously? Should the debt capital markets not be receptive over the next couple of months?

In vague terms, I think if we can get a shovel in the ground by year-end, the very early stages don't take a whole lot of money. We actually just submitted to the city for a building permit of our foundations literally 2 days ago, I think. And so we've given them the foundation plan to try to get the permit. So we have that out of the way. And the initial stage is literally a guy driving a bulldozer pushing dirt around. 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 buy some time. At some point, you start looking at the bonds have a call premium that goes away in February. I hope we get this done well before that, and we'll end up paying a premium. But if you slipped into next year before you could get going, if you had a gap, let's say you had to close the temporary in August because the state didn't let you operate past August, but you're ready to open in September or October, you might just choose to pay everybody to keep the workforce together. And just like Wynn paid everybody during the pandemic. I mean -- and you can figure out the cost of that. That cost us some money, but it also costs money to disband the workforce and start a new one. 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, and we want to continue to pay taxes. Is that okay with you? And I think the state is going to say yes, right? So I'm not really worried about whether we had it. Now if you had a very modest gap, you probably just pay people and keep it together because we have a great workforce here. In fact, we won all sorts of awards as being one of the top employers in Chicago, we'd like to be...

The only casino on that list.

Yes, the only casino on the list. And of course, we want to keep it all together. So I'm not actually worried about it. But obviously, in the 10-K, we have to disclose that our permission to operate the temporary only goes until August of 2027. We did once before, seek approval and received it to have that date extended by 2 years. So if the -- 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. And so if the bond market holds together several weeks, we can probably go get this done. We were pretty much ready to go get it done last March. 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, not quite back to where it was then, but pretty close.

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

And by the way, it didn't have to be the bond market. We have multiple ways to finance this. And you noticed Bally's went and used GLPI to finance their casino. That's always an option for us. We actually still have in place a backup financing with a private equity firm that's pretty expensive. So we hope not to use it, but we do have it, right? So we have other ways to do this and -- but we think the best route is bond market.

[Operator Instructions] Our next question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group.

This is Will on for Ryan. I wanted to hop back to Chamonix. You talked a lot about the cost savings kind of that you found and started to implement 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?

Well, I mean, there's a lot of things. And frankly, the Marketing Director at the property just started work a couple of days ago, right? So he's still trying to drink from a fire hose. But the -- I'll give you one simple example is a big thick mailer every month. It was pretty expensive to print, pretty expensive to mail and had not done a very good job of getting e-mails of its customers. We've been avidly trying to get e-mails. And to put that in perspective, here at American Place, we stopped sending physical mail a year ago just, and we only send e-mail. It's way cheaper to only send e-mail. And put that in perspective, if you're sending out a mailing piece with some promotion in it that cost you, let's say, $1 to print it and mail it, and that would be a pretty low number with the cost of postage these days. If you get a 5% take-up rate, which would be pretty normal for something like that, then it's costing you $20 for a customer to take up your offer. If you do it in e-mail, it costs you nothing, okay? And frankly, what we found at American Place is the...

The open rate.

The open rate and response on e-mail is just as good as it is with physical mail. And so making that transition and the person who was running the property was very old school. He would write a letter from him about the whole thing. And even though we said several times, we should get e-mails, we should migrate to e-mails, we really hadn't done it. 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. They're all new, given time, right? And with time, we will do very well. In fact, a number of them came out of the early Harrah's days where Gary Loveman ran the property. He was a professor of marketing at Harvard Business School before he became CEO of Harrah's and really created the state-of-the-art marketing programs that Harrah's had and the whole industry has been learning from that ever since. And so we're getting up to speed, but it doesn't happen overnight.

I don't remember the stat Dan, you may. The current ad campaign, I believe, will touch 80% of Colorado Springs on average 4x?

Something like that.

Don't quote me on those exact numbers, but they're pretty much in that ballpark. It's -- I mean, keep in mind, I think a lot of people forget this, we weren't fully open. So effectively, we've only been open since October of last year. We've effectively only been open for whatever that is, 10 months or whatever it is. So...

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. We have a jewelry store that's open every day that wasn't a year ago at this time. And when your hotels very low occupancy midweek, you're losing money on that, 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. And now we're getting smarter about it in many ways. But it doesn't happen overnight, but it is happening. The cost savings happened like started right away and it is getting better. We're actually in the market for a new Finance Director to help get better handle of our own results so we can focus in better on even more cost savings, okay? But -- so the cost savings are kind of easier to figure out to improve the marketing and get results takes longer.

We've got one other benefit. It's almost maybe a little fuzzier, but over the years, we've accumulated these different casinos in Colorado, and they're all adjoining and you never walk outside, but we have 3 different casino licenses throughout Chamonix and Bronco Billy's. And what we've been focused on for the last several months is effective -- 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. And we have people that do that. They think the machine is broken because the TITO ticket won't work from one machine up the stairs into another machine. The other piece that -- where we don't benefit is because we have 3 different licenses, we have to have 3 different cages open. 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 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 3 licenses. We'll only have to have 1 casino cage open. And if you think about cost savings all over again by having 1 cage instead of 3 cages open 24 hours a day, it's something like $700,000 a year in savings on top of a much, much better customer experience. And think about it, if you're a high-end customer, especially, little hindrances like that are just a pain in the butt.

By the way, this is something our new GM, Brandon, had put the TITO tickets being usable in all 3 licenses. He at one point, ran the Bally's properties in Black Hawk, and he was able to get the regulators to approve that at their property. Now they use a different slot system than we do. 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 regulates, if you will. 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. 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. TITO tickets are a big thing for the customers, though. And so the other thing I would tell you is anybody on the call, if you haven't been to Cripple Creek, you really should go and see 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, and they get it. It's like, okay, this new management is pretty smart, and they're working the right way and so on. So not to overplay it. But 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.

Sorry, I didn't mean -- if you have another question, feel free. I was going to say, Dan, we have time for maybe one more after you, but feel free if you have something else there.

I was just going to ask on the legacy properties. I think Rising Star, at least according to the state gaming data, had its first, I think, year-over-year growth in a little while. So curious if there's anything to note there on the legacy properties. That's all.

No, we have 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. And it's a challenging property because of the competition in every direction from us, 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. We -- but it does make money. If we could find a way to relocate it, it would be a much more profitable business for us. We've actually told the town we're in that we would pay them more in taxes than we pay them today, even if we relocated it. And we think it will 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 something we're working diligently on, and we think it's a win-win. So if everybody was rational, it should happen. But sometimes in these cases, they're not rational. But the property itself, I mean, it's a big footprint. It's a 300-room hotel, 18-hole golf course, traditional casino river boat, but one of the nicer ones that's out there, the boat is actually quite -- has some charm to it, has a nice decor to it and a pavilion with a restaurant and 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. And today, it's the oldest casino in the region, and it's got newer competition every direction. I think our team is doing a good job in tough circumstances to keep it going.

Probably time for just one last question, Dan.

Yes.

Okay. Our last question comes from the line of Ricardo Chinchilla with Deutsche Bank.

I was hoping if you could comment a little bit on the cadence of the quarter in terms of revenues. And when thinking about July in terms of like sequential improvement, just give us like some sense of how business has been evolving.

Well, I mean, at American Place, it's just been rock solid up every single month for 2 years now in both revenue and EBDIT. And that's continued into July, as we said earlier. At Cripple Creek, we've been very focused on pulling together a new management team and helping them get going and cost savings initially, hiring people, still a couple of positions we need to fill and now focusing on building revenues because ultimately, we need to build the revenues to get a return on our investment there that would be acceptable.

And just to be very clear, and July improved from what we saw in the second quarter, just to be very clear at Cripple Creek.

Yes. And then as we mentioned at the Silver Slipper, we actually -- we've had a new GM there, too, also for 7 or 8 months. And she is very experienced from our Indiana property, and she said that there were a number of people who are basically being over-comped, and we weren't making money on them. So we expected revenues to be off and EBDIT would have been flat except for a noncash accounting charge we had to take. And -- but it's doing well. I think it will end up the year comfortably up. I think last year, EBDIT was like 12%, it will probably end up around 15% this year. And that's taken into consideration how we did in the first half. And if it's not quite 15%, it will be close. And then we talked about the Hyatt, we're actually doing pretty well considering how much of the property has been closed for its refurbishment 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. And that's quite a bit different than the management team we've had in the past who had their own strengths. But I expect Tony to be the sort of guy who goes out and finds high-end customers who want to come to Lake Tahoe and rather than just somebody checks 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, and I'm optimistic that, that will show results again, not immediately, but over time. I think that address all of them. So listen, not a great quarter. We're working hard. Actually, a great quarter for American Place, which is the most important one.

Record quarter, Dan.

Yes. But that's the one where we're going to build the permanent next door. And of course, that's at this point, the biggest part of the company. Cripple Creek is a turnaround at this point. 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 -- I mean, I think we're going to continue to have our challenges at Tahoe because of what's closed, but it's pretty small in the grand scheme of things. And the Silver Slipper is actually trending up in general. This quarter didn't look that way because of the accounting charge. But in general, it's on a positive track as well. And nobody asked whether we'd rather buy Maverick or Century. And the answer is we're pretty busy these days. Sorry, I just wanted to wake Lewis up there. But we're pretty busy with what we do. If we just accomplish what we're doing, we'll be fine. So thank you.

This now concludes our question-and-answer session. I would like to turn the floor back over to Lewis Fanger for closing comments.

Well, Dan just said it. So thank you, everyone. We'll -- we're excited to talk to you next quarter with some more progress and hopefully, more record quarters here at American Place.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.