Full House Resorts, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This filing reports annual results, not a separate fourth-quarter income statement. The company operated five casinos in Mississippi, Colorado, Indiana and Nevada, while developing Chamonix in Colorado and American Place in Illinois.
Financial performance
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $180.2 million | $125.6 million | +43.5% |
| Operating income | $37.6 million | $10.5 million | +258.5% |
| Operating margin | 20.8% | 8.3% | +12.5 percentage points |
| Net income | $11.7 million | $0.1 million | Improved |
| Adjusted EBITDA (non-GAAP) | $47.2 million | $19.7 million | +140.2% |
| Cash from operations | $29.5 million | $9.0 million | +$20.5 million |
Revenue gains reflected a full year of operations versus pandemic-related closures in 2020, easing restrictions, stronger Silver Slipper performance and expanded sports wagering. Operating expenses rose 23.9%, slower than revenue growth; management cited higher guest volumes, gaming taxes and food costs, partly offset by labor and marketing efficiencies. Net income included the net effect of a $5.7 million CARES Act loan forgiveness gain and a $6.1 million debt-refinancing loss, as well as noncash warrant fair-value expense.
Casino revenue was $130.4 million; food and beverage revenue was $27.3 million; hotel revenue was $9.6 million. Adjusted EBITDA is a company-defined non-GAAP measure and should not be treated as a substitute for GAAP earnings or cash flow.
Liquidity, debt and capital
- At year-end, cash and cash equivalents were $88.7 million, with a further $176.6 million of restricted cash dedicated to Chamonix construction. Management estimated $7–$9 million was needed for day-to-day operations and believed available cash, operating cash flow and borrowing capacity would cover the next 12 months.
- Year-end debt principal was $310 million under 8.25% senior secured notes due 2028; the company also had a $3.3 million finance-lease obligation. The $15 million revolver was undrawn at year-end.
- After year-end, the company issued an additional $100 million of 8.25% notes and expanded the revolver to $40 million, which remained undrawn as of the filing. Total note principal was therefore $410 million as of February 7, 2022. The notes and revolver are secured by substantially all company assets and subject to restrictive covenants.
- Financing activities provided $235.3 million in 2021, including $310 million of note proceeds and $43.0 million net equity-offering proceeds. Investing activities used $37.2 million, primarily for Chamonix and Cripple Creek real estate.
Material changes and outlook
- 2020 comparisons are heavily affected by casino closures of roughly three months, making year-over-year growth less indicative of underlying trends. Management said post-reopening performance exceeded pre-pandemic levels, aided by cost restructuring.
- All five casinos were open by year-end. The company reported 2021 Adjusted EBITDA of $47.2 million, versus $19.7 million in 2020; segment results improved across all regions and contracted sports wagering.
- Chamonix’s planned capacity increased to approximately 300 rooms from 180. Its budget was raised from $180 million to approximately $250 million, citing supply-chain constraints, inflation and construction conditions. Management expected an opening in Q2 2023; approximately $221 million was in the construction reserve account in early 2022.
- Full House planned to invest approximately $100 million in The Temporary in 2022 and targeted a Summer 2022 opening, subject to regulatory approvals. The permanent American Place facility is also planned, but the filing does not provide a clear total project budget or opening date.
- Current Colorado and Indiana sports contracts carried $7 million in combined annual minimum revenue, with minimal related expenses. One operator planned to cease operations in one skin in each state on May 15, 2022; replacements were not assured. The company also expected to seek a sports wagering partner for Illinois.
- Silver Slipper generated 50.3% of 2021 revenue and 54.3% of Adjusted Segment EBITDA, creating material property and regional concentration. The company paid no common dividends and said it did not expect to do so in the foreseeable future.
Principal risks and unusual items
Key risks include COVID-19 or other disruptions, economic weakness and reduced discretionary spending, intense gaming competition, regulatory and licensing requirements, weather and access disruptions, labor and operating-cost inflation, and dependence on Silver Slipper. Development projects face cost overruns, delays, permitting risk and uncertain demand; Chamonix construction also disrupted Bronco Billy’s operations. Significant secured debt and covenant restrictions could constrain financing and flexibility. The company also disclosed risks involving sports-betting partner viability, leased-property rights, cybersecurity, environmental matters and the potential for insufficient insurance. Management reported no expected material effect from pending litigation.
The 2021 audit opinion on the financial statements was unqualified, and the auditor and management concluded internal control over financial reporting was effective. The auditor identified the deferred-tax-asset valuation allowance as a critical audit matter; the reported allowance was $9.9 million.
Investor verification priorities
- Confirm unrestricted liquidity, construction-reserve availability and compliance with debt covenants as project spending advances.
- Track Chamonix’s revised $250 million budget, construction schedule, draw conditions and stated Q2 2023 opening target.
- Verify regulatory approvals, spending and opening progress for The Temporary, and obtain a defined funding plan and timeline for permanent American Place.
- Check whether replacement sports wagering operators are secured and whether contractual minimum payments remain achievable.
- Assess whether 2021 operating gains persist beyond the pandemic-recovery comparison, including segment margins and Mississippi concentration.
- Review the full financial statements and debt disclosures for cash restrictions, lease obligations, dilution from equity issuance and the effect of interest costs.