August 8, 2013 - 1:43 pm
Full House Resorts Inc. on Thursday reported second-quarter earnings that fell short of analysts’ expectations, as the company continues to expand its casinos in Indiana and Mississippi, as well as rebrand itself into a “locals-oriented” regional casino company.
The Las Vegas-based gaming company reported a net loss of $42,000, or zero cents per share, compared with net income of $732,000, or 4 cents a share, in the second quarter of last year.
Revenue was $36.7 million, which was up from $27.8 million in the second quarter of 2012.
Analysts surveyed by Yahoo Finance expected earnings of a penny a share on revenue of $38.96 million.
“Despite increased competition and a stagnant economy, our casinos continued to perform well in the second quarter,” said Andre Hilliou, chairman and CEO of Full House Resorts.
The quarterly loss was attributed to income tax expense, according to the company’s quarterly earnings report.
Revenues from Stockman’s and Grand Lodge casinos in Northern Nevada were $5.2 million, comparable with the prior-year period. In April, Full House announced it had extended its lease until Aug. 31, 2018, with Hyatt Hotels Corp. for the Grand Lodge Casino.
Stockman’s Casino is located in Fallon; Grand Lodge is in Incline Village.
Rising Star Casino in Rising Sun, Ind., reported a year-over-year decline in revenue because of increased competition from casinos in Ohio. The casino posted revenue of $17.8 million, compared with $22.3 million in the second quarter of 2012.
“In terms of new development, construction on the new third-party hotel adjacent to Rising Star remains on schedule, and we expect it to provide a boost to Rising Star upon its opening in the fourth quarter of this year,” Hilliou said.
Currently, the casino operates a 190-room hotel. The new 104-room hotel is expected to accommodate more guests and “help mitigate (to some extent) the impact from new competition,” said Justin Sebastiano, an analyst with Brean Capital LLC
Hilliou also said Full House is moving forward with its much-needed hotel at its Silver Slipper Casino in Hancock County, Miss. Full House received a commitment for a $10 million loan led by Capital One with a 1 percent interest rate.
“The property currently does not have a lodging component and therefore usually loses most of its customers during the overnight hours,” Sebastiano said. “A hotel should help mitigate this loss. Moreover, we expect very high flow-through given the hotel will likely be a no-frills effort.”
Sebastiano has a “buy” rating for Full House and a price target of $4.50 a share.
In its earnings report, Full House said the company will fund the remaining $7.5 million of the 140-room hotel’s $17.5 million price tag. The company expects the loan to close and construction contracts signed within 30 days.
The Sliver Slipper Casino generated $13.4 million in revenue in the second quarter. The Silver Slipper was acquired in October for $70 million.
Management fees from Buffalo Thunder casino in Santa Fe, N.M., were $300,000.
“Our building Full House into a locals-oriented regional casino company remains strong and we continue to evaluate opportunities to achieve this end in a measured and conservative matter,” Hilliou said.
Shares of Full House Resorts lost 12 cents, or 4.18 percent, to close at $2.75 on heavy volume of 63,187 shares traded on the Nasdaq. The company’s shares have traded in a 52-week range of between $2.58 and $4.
Contact reporter Chris Sieroty at email@example.com or 702-477-3893. Follow @sierotyfeatures on Twitter.