Full House Resorts, Inc. (FLL) Bundle
Understanding Full House Resorts, Inc. (FLL) Revenue Streams
Understanding Full House Resorts, Inc.’s Revenue Streams
Primary Revenue Sources:
- Casino Revenue: $56,116,000 for Q3 2024, up from $50,240,000 in Q3 2023, a 14.1% increase. For the nine months ended September 30, 2024, casino revenue was $162,474,000, compared to $131,586,000 in 2023, reflecting a 22.4% growth.
- Food and Beverage Revenue: $11,100,000 for Q3 2024, compared to $9,086,000 in Q3 2023, a 22.2% increase. For the nine months, it was $31,272,000 in 2024 versus $25,419,000 in 2023, marking a 23.0% growth.
- Hotel Revenue: $4,693,000 for Q3 2024, sharply rising from $2,560,000 in Q3 2023, indicating an 83.3% increase. For the nine months, hotel revenue was $11,287,000 in 2024 compared to $7,052,000 in 2023, a growth of 60.1%.
- Other Operations Revenue: $3,778,000 for Q3 2024, down from $9,657,000 in Q3 2023, a decrease of 60.9%. For the nine months, it totaled $14,070,000 in 2024, down from $16,974,000 in 2023, a decrease of 17.1%.
| Revenue Source | Q3 2024 Revenue | Q3 2023 Revenue | Change (%) | 9M 2024 Revenue | 9M 2023 Revenue | Change (%) |
|---|---|---|---|---|---|---|
| Casino | $56,116,000 | $50,240,000 | 14.1% | $162,474,000 | $131,586,000 | 22.4% |
| Food and Beverage | $11,100,000 | $9,086,000 | 22.2% | $31,272,000 | $25,419,000 | 23.0% |
| Hotel | $4,693,000 | $2,560,000 | 83.3% | $11,287,000 | $7,052,000 | 60.1% |
| Other Operations | $3,778,000 | $9,657,000 | -60.9% | $14,070,000 | $16,974,000 | -17.1% |
Year-over-Year Revenue Growth Rate:
Consolidated total revenues increased by 5.8% (or $4.1 million) for Q3 2024 compared to Q3 2023, and 21.0% (or $38.1 million) for the nine months ended September 30, 2024, compared to the same period in 2023.
Contribution of Different Business Segments:
- Midwest & South segment revenues for Q3 2024 were $54,510,000, an increase of 3.7% from $52,553,000 in Q3 2023. For the nine months, it was $164,599,000, up 14.9% from $143,267,000 in 2023.
- West segment revenues increased by 74.9% to $19,387,000 for Q3 2024 from $11,085,000 in the previous year, and 74.3% for the nine months to $47,571,000 from $27,297,000.
- Contracted Sports Wagering revenues saw a significant decline of 77.4% for Q3 2024, dropping to $1,790,000 from $7,905,000 in Q3 2023, and a 33.8% decrease for the nine months to $6,933,000 from $10,467,000.
Significant Changes in Revenue Streams:
The substantial increase in hotel revenue is attributed to the phased opening of a new hotel at Chamonix, contributing to guest volume and food and beverage revenues. Conversely, the decline in the Contracted Sports Wagering segment is linked to contract terminations, affecting overall revenue consistency.
| Segment | Q3 2024 Revenue | Q3 2023 Revenue | Change (%) | 9M 2024 Revenue | 9M 2023 Revenue | Change (%) |
|---|---|---|---|---|---|---|
| Midwest & South | $54,510,000 | $52,553,000 | 3.7% | $164,599,000 | $143,267,000 | 14.9% |
| West | $19,387,000 | $11,085,000 | 74.9% | $47,571,000 | $27,297,000 | 74.3% |
| Contracted Sports Wagering | $1,790,000 | $7,905,000 | -77.4% | $6,933,000 | $10,467,000 | -33.8% |
A Deep Dive into Full House Resorts, Inc. (FLL) Profitability
A Deep Dive into Full House Resorts, Inc.'s Profitability
Gross Profit, Operating Profit, and Net Profit Margins
As of September 30, 2024, the company reported total revenues of $75.7 million for the quarter, up from $71.5 million in the same quarter of 2023, marking a 5.8% increase. For the nine months ended September 30, 2024, revenues increased to $219.1 million, a 21.0% rise from $181.0 million in 2023.
Operating expenses for the quarter were $73.2 million, compared to $61.2 million in the prior year, resulting in an operating income of $2.4 million for Q3 2024, down from $10.4 million in Q3 2023. For the nine-month period, operating income was $4.2 million, slightly up from $4.0 million in 2023.
Net loss for the quarter was $8.5 million compared to a net income of $4.6 million in Q3 2023. The nine-month net loss widened to $28.4 million, compared to $12.4 million in the previous year.
Trends in Profitability Over Time
Reviewing the trends, the gross profit margin for Q3 2024 stands at approximately 2.9%, compared to 14.5% in Q3 2023. The operating profit margin has decreased significantly, reflecting operational challenges and rising costs associated with new openings.
For the nine-month period, the gross profit margin was approximately 1.9%, down from 2.2% in 2023. The net profit margin for the nine months ended September 30, 2024, was around (12.9)%, compared to (6.9)% in the prior year.
Comparison of Profitability Ratios with Industry Averages
The current operating margin of 1.1% is below the industry average of approximately 10% for similar gaming and hospitality companies. The net profit margin is also substantially lower than the industry benchmark of around 5%.
Analysis of Operational Efficiency
Operational efficiency has been impacted by rising operating expenses, which increased by 19.7% for Q3 2024 compared to the prior year. Notably, selling, general and administrative expenses rose by $4.7 million or 21.3% for the nine-month period.
The following table summarizes key profitability metrics:
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenues | $75.7 million | $71.5 million | $219.1 million | $181.0 million |
| Operating Income | $2.4 million | $10.4 million | $4.2 million | $4.0 million |
| Net Income (Loss) | ($8.5 million) | $4.6 million | ($28.4 million) | ($12.4 million) |
| Gross Profit Margin | 2.9% | 14.5% | 1.9% | 2.2% |
| Operating Margin | 1.1% | 14.5% | 1.1% | 2.2% |
| Net Profit Margin | (12.9)% | 6.4% | (12.9)% | (6.9)% |
Debt vs. Equity: How Full House Resorts, Inc. (FLL) Finances Its Growth
Debt vs. Equity: How Full House Resorts, Inc. Finances Its Growth
At September 30, 2024, the company's total long-term debt stood at $450.0 million under the Notes, with an additional $27.0 million from the Credit Facility. The company also has $1.8 million related to a finance lease for a hotel at Rising Star. All debt, except for the Credit Facility, carries fixed interest rates.
The debt-to-equity ratio is a crucial metric for assessing financial leverage and risk. For Full House Resorts, the debt-to-equity ratio as of September 30, 2024, is calculated as follows:
| Total Debt | Total Equity | Debt-to-Equity Ratio |
|---|---|---|
| $478.8 million | $51.8 million | 9.24 |
This ratio significantly exceeds the industry average, indicating a higher reliance on debt financing as compared to peers. For context, the average debt-to-equity ratio for the gaming and hospitality industry is typically around 2.0.
In recent months, the company has engaged in refinancing activities, including the issuance of $40 million in Senior Secured Notes due in February 2028. This issuance was primarily to fund the construction of the Chamonix project. As of September 30, 2024, the company has restricted cash of approximately $7.7 million, earmarked for the completion of this project.
The company balances its debt and equity by utilizing both financing methods to support growth initiatives. The recent capital investments in projects such as American Place and Chamonix indicate a strategic approach to leveraging debt while maintaining equity levels. The financing strategy includes plans to internally generate funds for future capital needs but also acknowledges the potential requirement for additional financing.
Interest expense has been rising, with net interest expense for the nine months ended September 30, 2024, reported at $32.3 million, a significant increase from $16.3 million in the prior year. This increase reflects the company's growing debt levels and the associated costs of servicing that debt.
In summary, Full House Resorts, Inc. employs a robust debt structure to finance its growth, which is evident in its high debt-to-equity ratio and significant interest expenses. The ongoing projects require careful financial management to balance the risks associated with high leverage against the potential for enhanced revenue generation.
Assessing Full House Resorts, Inc. (FLL) Liquidity
Assessing Full House Resorts, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was approximately 0.87, calculated from current assets of $48.2 million and current liabilities of $55.4 million.
Quick Ratio: The quick ratio stood at approximately 0.64, factoring in cash and cash equivalents of $33.6 million and excluding inventories and other current assets.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was reported at $(7.2) million as of September 30, 2024, reflecting a decrease compared to $(24.0) million in the prior year.
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $48.2 | $55.4 | $(7.2) |
| September 30, 2023 | $84.6 | $60.6 | $24.0 |
Cash Flow Statements Overview
Operating Cash Flow Trends
During the nine months ended September 30, 2024, cash used in operating activities was $(1.0) million, a significant decline from cash provided by operations of $3.2 million in the prior year.
Investing Cash Flow Trends
Cash used in investing activities totaled $(37.7) million for the nine months ended September 30, 2024, primarily due to capital expenditures related to the construction of Chamonix.
Financing Cash Flow Trends
Cash used in financing activities was $(1.3) million, a stark contrast to cash provided by financing activities of $59.4 million in the same period of 2023.
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $(1.0) | $3.2 |
| Investing Activities | $(37.7) | $(169.8) |
| Financing Activities | $(1.3) | $59.4 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company had $33.6 million in cash and equivalents, which includes $7.7 million of restricted cash dedicated to construction projects. The company estimates that between $10 million and $15 million of cash is used for day-to-day operations.
Long-term debt stood at $467.4 million with a principal maturity in February 2028. The company has indicated that the current cash balances, combined with available borrowing capacity under the revolving credit facility, are expected to meet liquidity needs for the next 12 months.
Is Full House Resorts, Inc. (FLL) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is not applicable as the company reported a net loss of $(28,373,000) for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The book value per share is calculated using total stockholders’ equity of $51,819,000 and shares outstanding of 35,446,627, resulting in a book value per share of approximately $1.46. The current stock price is $1.35, giving a P/B ratio of approximately 0.92.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) can be calculated as market capitalization plus total debt minus cash. With a market cap of $47.9 million, total debt of $467.4 million, and cash of $25.9 million, the EV is approximately $489.4 million. Adjusted EBITDA for the nine months ended September 30, 2024, is $43.7 million. Thus, the EV/EBITDA ratio is approximately 11.2.
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations, reaching a high of $3.29 and a low of $1.05. Currently, the stock is trading at $1.35, reflecting a decline of 59% from its 12-month high.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
The consensus among analysts is a Hold rating, reflecting concerns over recent performance and future outlook.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | Not Applicable (Net Loss) |
| P/B Ratio | 0.92 |
| EV/EBITDA Ratio | 11.2 |
| Current Stock Price | $1.35 |
| 12-Month High | $3.29 |
| 12-Month Low | $1.05 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Full House Resorts, Inc. (FLL)
Key Risks Facing Full House Resorts, Inc.
Overview of Internal and External Risks
The company faces several internal and external risks that can significantly impact its financial health:
- Industry Competition: The gaming and hospitality industry is highly competitive. The company experienced a 77.4% decline in revenues from its Contracted Sports Wagering segment for the three months ended September 30, 2024, compared to the prior-year period.
- Regulatory Changes: Future developments in gaming regulations can affect operational capabilities and profitability.
- Market Conditions: Economic downturns can reduce consumer spending on leisure activities, impacting revenue streams.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several operational and financial risks:
- Operational Efficiency: Adjusted Segment EBITDA declined by 38.5% for the three months ended September 30, 2024, compared to the same period in the previous year.
- Increased Operating Expenses: Consolidated operating expenses increased by 19.7% (or $12.1 million) for the three months ended September 30, 2024.
- Weather-Related Disruptions: Adverse weather conditions, including significant snowfall, adversely affected guest traffic during peak periods.
Mitigation Strategies
The company has outlined several strategies to mitigate these risks:
- Cost Management: Focus on controlling operational costs to improve profitability despite revenue fluctuations.
- Diversification: Expanding non-casino revenue streams, which increased by 331.9% for the three months ended September 30, 2024.
- Market Adaptation: Continual assessment of market trends and regulatory landscapes to adapt operational strategies accordingly.
| Risk Factor | Description | Recent Financial Impact |
|---|---|---|
| Industry Competition | High competition in gaming and hospitality sectors | 77.4% revenue decline in sports wagering segment |
| Regulatory Changes | Potential changes in gaming regulations | Uncertain impact on operations |
| Market Conditions | Economic downturns affecting consumer spending | Overall revenue fluctuations |
| Operational Efficiency | Challenges in maintaining operational efficiency | 38.5% decline in Adjusted Segment EBITDA |
| Increased Operating Expenses | Rising costs in operations | 19.7% increase in operating expenses |
| Weather-Related Disruptions | Impact of adverse weather on guest traffic | Loss of potential revenue during peak periods |
Future Growth Prospects for Full House Resorts, Inc. (FLL)
Future Growth Prospects for Full House Resorts, Inc.
Analysis of Key Growth Drivers
The recent phased opening of Chamonix, which began operations on December 27, 2023, is a significant growth driver. This new facility has contributed to a total revenue increase of 74.9% (or $8.3 million) for the three months ended September 30, 2024, and 74.3% (or $20.3 million) for the nine months ended September 30, 2024.
Non-casino revenues saw remarkable growth, increasing by 331.9% (or $3.9 million) and 242.4% (or $7.7 million) for the respective periods. The new hotel at Chamonix, which features approximately 300 rooms, has been pivotal in driving guest volume and, consequently, food and beverage revenues.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenues reached $219.1 million, up 21.0% from $181.0 million in the prior year. The casino revenue specifically increased by 23.5% to $162.5 million, largely due to the contributions from both Chamonix and American Place. Projections indicate continued revenue growth as Chamonix becomes fully operational and further enhances the overall guest experience.
Strategic Initiatives or Partnerships that May Drive Future Growth
The company has engaged in strategic partnerships, particularly in the sports wagering segment. The Illinois sports wagering agreement has contributed $1.5 million to revenues for the three months ended September 30, 2024, and $4.4 million for the nine months. This agreement ensures a minimum annual revenue of $5 million, positioning the company well for future growth in this sector.
Competitive Advantages that Position the Company for Growth
Full House Resorts benefits from its diversified revenue streams, including significant contributions from non-casino operations. For example, food and beverage revenue increased by 22.2% (or $2.0 million) for the three months ended September 30, 2024, and 23.0% (or $5.9 million) for the nine months. The company’s ability to leverage both casino and non-casino revenues allows it to remain competitive and adaptable in fluctuating market conditions.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $75.7 million | $71.5 million | 5.8% |
| Casino Revenues | $56.1 million | $50.2 million | 11.7% |
| Non-Casino Revenues | $19.6 million | $21.3 million | -8.1% |
| Net (Loss) Income | $(8.5) million | $4.6 million | -284.5% |
| Adjusted EBITDA | $13.5 million | $21.9 million | -38.5% |
Corporate expenses have also increased, rising by 36.1% (or $0.5 million) for the three months ended September 30, 2024, which may reflect investments in growth initiatives. This indicates a commitment to expand operational capabilities and enhance overall performance.
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Resources:
- Full House Resorts, Inc. (FLL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Full House Resorts, Inc. (FLL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Full House Resorts, Inc. (FLL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.