Lewis Fanger - Senior Vice President, Chief Financial Officer, Treasurer Dan Lee - Director, President & Chief Executive Officer.

Chad Beynon - Macquarie John Decree - Union Gaming.

Good day, and welcome to the Full House Resorts’ Fourth Quarter 2016 Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Lewis Fanger, Chief Financial Officer of Full House Resorts. You may begin..

Thank you. Good afternoon, everyone. Welcome to our fourth quarter 2016 earnings call. Before we begin, I need to 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 caption forward-looking statements for the discussion of risks that may affect our results.

Also, we may make reference to non-GAAP measures such as EBITDA and for a reconciliation of those measures please see our website as well as the various press releases that we issue. We’re also broadcasting this conference call at fullhouseresorts.com where you can find today’s earnings release as well. With that all said, let’s go Dan..

Well frankly the earnings release as we always have a pretty detailed on so it really tells you just about everything, but I’ll try to hit some of the highlights. Revenue was up at every segment in both the quarter and the year, it was great. Company is doing pretty well.

EBITDA was also up in most segments in the quarter and in all segments in the year. The Bronco Billy’s is doing well in accordance with the $5 million of EBITDA that we expected when we acquired it in May of last year.

So let me go property-by-property starting with the biggest earnings contributor, which is almost roughly half the company, the Silver Slipper. Revenues were up 6.5% in the quarter and about 4% for the year. It was a very good quarter for the Silver Slipper, it was up 24% in EBITDA in the quarter but up only about 1% for the year.

frankly the year would have been better except for the flooding that happened on the North shore of Lake Pontchartrain in August and September, you may recall watching on the news, houses flooding away stuff.

Our property didn’t flood, but probably half of our customers come from that area that did flood and so we had a pretty weak third quarter because of that and yet pulled it out to be up a little bit for the year and we also had the benefit of the hotel there was open for the full year in 2016 and then open in stages during 2015.

So you can see if it wasn’t for the flooding we probably would have been up more just because we had the hotel for the full year.

If the property were in for permits this week, to build the beach club and have it done by Memorial Day weekend that’s pretty quick, but it’s really just a swimming pool with decking and a bar on the beach, it’s designed ready to go so should be able to build it pretty quickly and we designed it and re-designed it and re-designed it and now we’ve got somewhere pretty comfortable with.

With the hotel - the casino sits at the end of this beautiful white sand beach by the Oslong [ph] and it is the closest beach to New Orleans or Baton Rouge, the water is murky there so don’t think about crystal Caribbean waters, people tend not to swim because it’s just muddy because you’re not too far from the mountain of Mississippi, but the beach itself is beautiful, so people do fish there and people wait and they walk and they sit on the sand and all that stuff and our casino kind of ignores it, we literally have a parking lot along the beach and so what we’re going to do is kind of bring the focus to the beach by putting a beach club down at it.

This is Bay Saint Louis Mississippi [indiscernible] say this, but it’s almost like beach clubs Saint-Tropez, California or Saint-Tropez, France down in the style of Mississippi of course but the idea is that, there is a place to sit on the sand, have a margarita, hear some music and enjoy and all of our competition down there pretty much all of them have swimming pools, but they tend to be more oriented towards families with Lasy River’s and slides and stuff.

We don’t have any of that, we don’t want the kids, they don’t gamble. So we’re doing more of an adult environment similar to what would you find in [indiscernible] or Saint-Tropez something where then where people sit out, enjoy the sun and have a drink.

I think that will be pretty important to us in the summer to help us fill the hotel especially midweek in the summer.

When you live inland in Southeast Louisiana or Southwest Mississippi it’s hotter than blazes in the summer and the humidity is super high and so the idea of going down and having an ocean breeze is pretty pleasant and so I think it will be unique.

We also - the hotel is elevated some of this is all a challenge to build because you can’t build any permanent structures below 30 feet because this area gets an occasional hurricane and fact some of the largest some surges in history have occurred right at where are and so everything has to elevated, so at least in theory the next time there’s a big storm surge, it washes underneath us and we’re okay, we keep it well insured just in case that theory is wrong but - and so apparently the swimming pool is okay, the thought is if you have a strong surge, you end with salt water in your pool but it doesn’t actually destroy the pool, so but even things like the bathrooms are going to be the type of bathrooms you’d have at a very high end wedding outfield [ph]somewhere.

So at least in theory, if there’s storm coming we can unhook it, put it on a pickup truck and drive it away and protect it and that’s how we are able to get bathrooms down along the beach and they’re not elevated 30 feet in the air.

And then but underneath our hotel we have this large space that we’ve never really used and so we’re installing louvers that are designed to break away in case there is a storm and clear plastic that’s on a roller that can go up and down automatically to somewhat enclose it, to make it usable as a vent space even if the weather is a little bit inclement because we don’t have meeting room space ballroom or anything like that if the property and for very modest amounts of money we’re going to turn the ground floor of the hotel into usable event space and for kitchen we bought a food truck and the food truck is the kitchen.

And if there’s a hurricane that foot truck’s been high towed up the road and stay out of the storm surge. So we’re finding creative ways to enhance the customer experience at this property, we’re also putting up two reader board signs at a major [indiscernible]. So that’s the Silver Slipper.

At Rising Star, revenue is up 4% in the quarter and 4% for the year. EBITDA in the quarter was down $400,000 versus $754,000 and I’ll explain that in a second and for the year it was $2.9 million versus $4 million, but the $4 million included $1.4 million credit for resolving a longstanding real estate tax dispute that had been at the property.

So the prior year number was really $2.6 million and so excluding that gain, we were $2.9 million versus $2.6 million which should be 12% increase and so Rising Star actually had a pretty good year coming off a low base. In the quarter, they were couple of things that effected the quarter.

One was, you know the fourth quarter was profitable now because we do this Christmas promotion, didn’t used to be profitable and the first year we did the Christmas promotion where we tongue-in-cheek we give the casino over to Santa Claus and we have live reindeer near the entrance and decorate the crap out the thing and Figgy pudding on the buffet and so on and it worked and last year, it went from unprofitable to profitable in the fourth quarter.

I was little concerned going into this year that the sequel wouldn’t live up to the first year, just like the sequel of a movie often doesn’t do as well as the first movie and so we wanted to make it bigger and better, so we could get people to come back to see the Christmas casino and hopefully have it evolved into an annual tradition where it’s something people do during the Christmas season and so we bought even more decorations and did more things and opened big retail stuff all that worked and we also added a skating rink and we actually rented the skating rink, there are companies that do that and they come and fill the skating rink for you and we got some money from renting skates and renting time on it, but it didn’t pay for itself and ultimately it cost us roughly $100,000.

It’s kind of promotional cost, we didn’t expect to make money on the skating rink, but when you’re looking at the year-over-year results our revenue was pretty flat for the year before, we’re happy about that but we spent an extra $100,000 in promotional stuff on this skating rink principally to get there.

And so I’m not disappointed on that, I’m quite happy that we were able to match the prior year number in the revenue in the quarter.

And then, we had a finance director take another job offer somewhere else and we brought in a new one and the new guy went through everything and as it sometimes happen with that, we found some accounting adjustments that added up to $200,000 where things weren’t accrued as conservatively as we would normally accrue them at our other properties and which might tell you, why when the guy got a job offer somewhere else we didn’t counter the offer anyway, so anyway so that’s Rising Star.

It’s not a big deal that weren’t a major issue, but we did have some accounting adjustments in the quarter for $200,000.

Then we got a lot of stuff happening there now, the RV park is now under construction, we broke around last week, should be done Memorial Day, we’re taking reservations for Memorial Day, 56-space RV park, 9% US households now own an RV, 60% of those RVs are made in Indiana, haven’t been able to find anything that definitively says that there’s strong RV ownership in Ohio and Indiana, but my sense is that there is, if anything it’s above that 9% number and RV parks are pretty common at Casino, so we have one at the Silver Slipper at Peneco [ph] Boomtown in Reno.

Here in Las Vegas they have one down at Main Street Station, they have one at Circuit Circus, they have one down at Arizona Charlie’s and Boulder Highway and so on and yet if you look at Indiana there is no RV park at a casino and nor is there in Ohio, nor in West Virginia, nor in Pennsylvania and the entire region we will have the first RV park at a casino and it’s a pretty unique RV park because an RV park is normally unlike the edge of town or out in a farm or something.

Ours is right in the middle of this cute little historical River town [ph] and your steps from our casino, but you’re also steps from the town’s boat ramp and you’re steps from downtown rising sunset. I think the RV park is going to be pretty successful cost us about $1.5 million and we pick up 56 spaces.

In a lot of ways it’s like adding a hotel, except caused a lot less per room and I think the demographics of the person staying in the RV park is probably actually higher than it is in our hotel.

The average RV cost little more than $40,000 and so a family that can afford a $40,000 toy and it is a toy, is a family pretty good demographic and so we’re pretty happy about.

Ferry boat making good progress, we’ve actually identified a boat, when I say a ferry boat, this is similar to the Anderson Ferry which just celebrated its 200th year of operation and that operates between Cincinnati Airport and the west side of Cincinnati and if you pull up their website, you’ll see the type of boat we have in mind, it’s really a barge that holds 10 cars and a small tugboat that can push the barge back and forth.

And we’ve identified a tugboat for sale, we have somebody inspecting it to today actually and we can get the barge built and we’re negotiating with the shipyard to have that built and it could be built in about three months and it’s kind of a specialized barge because you have to have fire suppression inside the barge itself because you’re carrying passengers and when you have these ramps on the end that need to go up and down, and so on.

But and then we’re submitting, we finished a lot of the submission to the Corps of the Engineers, for the road and the ramp’s going into town. We moved the road 50-feet to avoid a spot that was identified as possible archaeological stuff and so that’s coming along.

We expect or hope that we’ll get Corps approval this spring and then, we build the road and the ramps which will take month or two and hopefully later in 2017, we will have a ferry service operating and that will make us a lot closer to a lot more people then we’re today.

The county across river has 120,000 people in it and the county we’re in has 6,000 people in it and so but because there’s no bridge 20 miles either side of us, on the high river it’s hard for those people to get to us, this little ferry boat will make that much easier.

We’re also going to add a casino via T [ph] space a restaurant in the casino and some improvements to the pavilion, all of which are being designed by design firm and I’ve been haranguing them every day to get the plans out of them, I think we’ll get them soon and do all that later this year.

Bronco Billy’s had $725,000 of income in the quarter of EBITDA. $3.4 million for the 7.5 months we owned it.

You’ll notice if you annualize $3.4 million by just divide by seven by times 12 you’ll get something like $5.5 million, when we bought this we said we thought it would earn about $5 million a year, it is - there is some seasonality here, so the summer is seasonally strong, so just don’t divide by 7.5 and conclude with - at a $6 million year run rate, we think the run rate is about 5 which is pretty much what we expected when we bought it and we’re quite happy with it.

We’re starting to ramp up faster now to design a hotel, we’ll go next door to it. We own nice piece of land right next to it, but allows to have a hotel.

We do have some hotel rooms now 14 that are on the roof of our casino and but they’re okay and then about a block away we have kind of historic building that has 10 rooms in it and they’re not so okay.

The historical building I think it might have been awarded 100 [ph] years ago, but they’re okay and our customers do stay there, but that’s kind of emblematic of the town itself, there’s about 500 hotel rooms in town and most of them are pretty substandard, there’s a few exceptions, but most of them are pretty substandard and frankly relative to the size of Colorado Spring which is 700,000 people and it’s an hour away, that’s where customers come from and we find our business drops off in the evening because people need to drive home with not enough hotel rooms for them to stay in town and so we think we would benefit significantly by having a hotel and just to put some parameters around it, probably cost $25 million to $30 million, has somewhere between 100 and 150 rooms.

We would target kind of four star, four diamond similar to an Ameristar built in Blackhawk only not that bigger place. Denver is a bigger city than Colorado Spring, so they had a bigger market completely.

And I think it might double our income at this property add about $5 million a year to it, just because people could stay longer in, be more pleasant [indiscernible] visit.

This year we’ll be designing it, if we succeed in getting all the approvals from the city and state and so on, the idea is to start construction in 2018, finish it in 2019 and most of the expenditure would fall into 2019, if you spend some time looking at our balance sheet, we can probably fund about half of that from cash flow and I’m thinking we could probably borrow the other half and we haven’t worked out those details yet, but that kind of works.

And so that’s what we’re planning for Colorado Springs. Northern Nevada the revenues in the quarter were up 12%, up 6% for the year EBITDA was up 13% in the quarter and 6% for the year. Now within that, there’s two properties in our Northern Nevada segment.

The Grand Lodge Casino at the Hyatt at Lake Tahoe was weak in the quarter and it had been a little weak all year, but it was weak in the quarter. They always pray for snow up there because it makes great snow season and they prayed a little too hard, the power was out, you couldn’t get there for several weekends in December.

They’ve had a gangbusters winner for the ski areas and frankly that should bode well for a long season and we’re going to be happy with that, but in December and even in January it was kind of rough, you literally couldn’t get to it and as Scott Ruhl likes to say, we operated several evenings with a romantic setting because when you’re running on the emergency generators the slot machines still works, but most of the lighting in the casino is provided by slot machines and so Incline Village being kind of remote, it’s not unusual for the power to go out there.

Offsetting that and by the way, in Tahoe we’re now well into the renovation that started a couple weeks ago, dust walls went up, so we’re operating with about half the casino square footers that we normally do and the renovation is going full board behind those walls and then somewhere in few weeks we’ll switch and keep the casino open and refurbish the other half.

And should all be done by June, it’s a $5 million refurbishment which is frankly a lot of money to refurbish a relatively small casino. We’re not moving any walls so that’s gaming tables and carpeting and wall paper and we’re redoing bower [ph] to make it more interesting and so on.

And off that $5 million, Hyatt funds $3.5 million and our rent goes up by about $500,000 a year, so that’s how they get a return on it and we fund $1.5 million which is slot chairs, tables and slot machines and stuff like that and then we got a five-year extension on the lease.

So in effect by reinvesting about half of one year’s cash flow, from our perspective we’ve got a five-year extension on the lease with little increasing rent, so I think the refurbished casino is going to blow people away, it’s going to be really nice and I think the property would be up, by more than it’s rent is up and that will reverse kind of soft year we had this year.

In Fallon, we took down the office building that was blocking the view of the place put in a new parking lot we didn’t get that done as quickly as they would have liked and then we were into the winter, it rains a lot there and you can’t really do the landscaping in the winter, we had to wait till spring so landscaping is not in yet and there is a porte-cochère we’re building there that we’ve had some challenges with just because the talent pool and Fallon doesn’t know how to build this, designed to have metal studs and there wasn’t anybody new - metal, so we re-designed it to use wood and then finding the right tempers and all that.

Anyway landscaping and the porte-cochère should be done in the second quarter and the landscaping that includes the lighting in it and we’ll come back later this year and build the replacement office space at the moment, our management team works out of set of construction trailers.

But despite those delays, Fallon is been doing pretty well and more than offsetting the weakness in Northern Nevada and I guess people are more than happy to park in the new parking lot and don’t care where the landscaping is, didn’t get or not go in the landscaping and it’s going to be very pretty and porte-cochère will be very nice and I think will help the property even more, but it’s been doing well.

And I think there was, in the snow the town has been struggling with, there’s been rain in Fallon and I don’t remember the statistic I heard, but it was something like in one week they got more rain than they normally get in the year or something, so but the property has done okay, anyway. I’d say that address all the existing properties.

We continue to look for way to utilize our excess gaming capacity at Rising Sun, we’re legally entitled to operate more than twice the gaming capacity that we needed to have the revenues that we have today or even the revenues that we anticipated having and so you recall, we had a proposal in Indianapolis, but we were responding to a request from proposals by the airport, the airport decided they didn’t really want a casino out there and we were at their best proposal, so they withdrew their request for proposals rather than accept our proposal, which legally they could do.

We came this year, with a proposal in a town called Terra Haute.

We were actually approached by a state Senator in Terra Haute, who wanted the jobs and the tax revenues, backed strongly by the Chamber of Commerce, by the City Council, by the Accounting Commission really just everybody in Terra Haute kind of stood up and applauded and said good luck to have this.

The bill was introduced in the State Legislature went to the public policy committee that’s the normal process, there is a vote there that was 5-5 and we needed 6-4. We needed 6-4 because the chairman in public policy commission who’s from Lafayette, Indiana was in the dissenting side and if you have a tie vote, he could have let it go to the floor.

He’s from Lafayette, that happens to be where the CEO of Centerra Inc.

is from which is the company that has two race tracks that are east and northeast of Indianapolis and one of the other members of that, commission is from one of those towns where the race track is and the other one is from Evansville [indiscernible], and even though we don’t think would have any impact on it, but sells [ph] quite away from us, nevertheless they didn’t want to see it happen.

Legislature is not over yet and strange things happen sometimes as state legislatures, I think Mark Twain said nobody is safe when the state legislature is in session and we’re continuing to push this, we will eventually get this and it might very well be Terra Haute because it’s a community that needs the jobs, need the tax revenues, sits on the Illinois border and is barred from many existing casino and frankly there is a Bill that just passed the State Senate in Illinois that allows six new places in the Illinois one of which is Danville, which happens to just across the border from Terra Haute, so it’s like who’s going to get this population center here, that there is a pretty good population center there between Terra Haute and Danville, does this go to Illinois or does it go to Indiana.

Right and Indiana’s got to decide what they want, but this is something that makes sense for the state, though the slot machines that they have are located in the wrong spots, since they legalize casino gaming.

Illinois expanded their capacity and Ohio legalized and we used to get most of our customers from Ohio, we don’t nearly as many we use to and so it is better for the state to revisit this and relocate some of its capacity to places that will boost the revenues and the jobs and the investment in the state and of course it creates an opportunity for us.

Now, will we get it this year? I don’t know, legislature meets every year, we know how to get there every year and they take us five years. I think they took the race tracks something like seven or eight years before they slot machines.

Okay and public companies go on forever, I maybe dead when this gets approved but it will eventually be approved and it will eventually happen and I think it most likely happens at Terra Haute, but there are other places in the state like Fort Wayne is city of 400,000 people has no casino.

I mean there are other places in state this can happen and I think it will eventually happen, don’t know if it happens this year. So and frankly from our perspective, if it happens this year that’s great, but I get the question all the time where are you going to find $150 million if it happens this year, I don’t know. I’d find it.

Right and Lewis and I had a private company before this and we had a $500 million project in Lake Charles, Louisiana, we found that money but then ultimately we were offered a good price by Ameristar, so we sold the company. But - so I’m confident with Full House’s balance sheet and our cash flow that I can fund the money.

But honestly if it passes next year, then it’s probably even easier for us to find the money with less dilution to our existing shareholders. So as things evolve, whether it happens this year or next year or the year after, there’s still an opportunity for us and I do think it will happen eventually.

And of course, there’s other stuff we look at, but nothing I can talk about the moment so and that, did I miss anything?.

No, I think the only thing I would add Dan is, to give you a little more color on Bronco Billy, that property is performing in line with our expectations.

If you actually look at what they did prior to our ownership they did about $4.8 million for the full year assuming we owned it on January 1 that all said, they had a rough December where there was snow literally going into pretty much every weekend in the month, but all that came back and then some, we had a record coin in day, a record win day on New Year’s Eve and just last week, we had another top 20 revenue day, so the business there is doing pretty tremendously..

Yes, the only other thing I would add is, we keep looking at the debt on our balance sheet, we should probably refinance this debt at some point. Our bank debt has two years to go, we don’t want it to become a current liability. It actually jumps 50 basis points and cross here shortly in May, right. I think it’s May..

May, yes..

And in our second tier debt that’s callable today at 103 and then drops to 102 in May and then looking at the high yield market for example is at a pretty high market these days.

So we are kind of thinking about that, nothing to report but it does make sense for us to refinance our debt before the maturity get too short, don’t have to do anything at the moment and usually that’s the right time to refinance this, when you don’t have to do it..

Let’s see some questions..

Yes, it’s great..

[Operator Instructions] we’ll take our first question from Chad Beynon with Macquarie..

First one just a high level one, we heard a lot of commentary and seeing the fourth quarter results from lot of regional gaming companies in the space and they’ve been largely mixed, mostly because of weather and some timing of some things.

But generally since the Presidential election, have you seen anything different in your business and kind of where are your properties are located based on everything that we know at this point, are your general managers feeling any better or worse, based on what their customers are saying, just kind of a broad question on that to start. Thanks..

Well our Republican customers are happy and our Democratic customers are not. But - we only have handful of property, so we tend to get more absorbed in what’s going on in our specific localities I’m not sure we’re good judge of the national, regional market.

But our numbers have been pretty good and first quarter looks pretty good with the exception of it snows on the wrong day sometimes, so other than weather events. I certainly don’t see any signs of recession and I think there’s lots of signs that people are feeling good, but I don’t.

That’s a question better asked to somebody like Caesar’s has got 40 properties across the country and there’s a more representative regional gaming company than us, but certainly like the Silver Slipper, the north shore of Lake Pontchartrain we had the flooding, but otherwise that’s a growing healthy region, that’s one of the wealthiest St.

Tammany Parish, which is the largest of the three parishes on the north shore of Lake Pontchartrain is the wealthiest Parish in the state and one of the fastest growing and the other two parishes of the north shore of Lake Pontchartrain are also fast growing.

And so we celebrate a good demographics there and it happens without much fewer of the competing casino. In Louisiana, all the licenses are up and running, doesn’t really make sense for somebody to move a license certainly not to hear if you could move a license, move Louisiana you’d move it over to the Texas border and in Mississippi.

There’s an unlimited number of licenses but you have to be within 800-feet of the tide line and all the stuff, but it’s also hard to make the numbers work.

There’s a new property in, had opened just over a year ago the Scarlet Pearl in Biloxi and I think their revenues are probably half of what they forecasted and the scuttlebutt we hear is that, EBITDA is zero and they have a $325 million investment, it’s a mature market and in fact I ran the math on the Silver Slipper, I don’t think if it didn’t exist I don’t think the numbers would make sense to build it.

I mean, it cost $80 million when it built 10 years ago and then added the hotel last year for $20 million, so the replacement cost today is probably $120 million, $130 million, $140 million and cash flow is 10 [ph]. And so those numbers don’t work, that built at new, now that’s all kind of irrelevant.

The cost, what it originally cost, what we bought for it, it’s all irrelevant that’s in the stock price and today it’s an asset making $10 million a year and the fact that, the replacement cost would be high relative to what it earns.

Really only has two aspects to it, one is it means is really hard for somebody to make the numbers work to build the competing one down the street and number two, a hurricane could be a very happy event because the claim you get in a hurricane is replacement cost. Okay, so that’s the Silver Slipper.

At Rising Star, all the license are open in Ohio, everything is open in Indiana. There are some historical racing machines in Kentucky at certain race tracks, but there is only one race track in Northern Kentucky, it’s owned by Dan Gilbert, who owns the Jack’s Casino in Downtown, Cincinnati.

He didn’t seem in any big hurry to put slot machines, historical racing machines in that race track and I’m not sure that it’d be very competitive, if they did it and so here, it’s - we’re much more focused on the upside of the ferry boat rather than what’s going on in the economy.

I will tell you the summer at Tahoe was weak and we don’t really have a good explanation for that and I wondered whether there’s something going on in the economy or the place was just getting a little worn out.

But we weren’t happy with last summer’s result at Tahoe and at Fallon, it seems to be top secret but they’re building a lot of stuff, the naval air station which we think is probably positive for us and Tesla is building this huge Tesla factory 30 minutes the other side of us.

I think it’s probably positive for us and both of those are way more important than anything going on in the economy in Fallon..

I think if you were to just isolate the individual months Chad, January there were a lot of weather issues, we didn’t have it at Silver Slipper but we had them elsewhere. February and March were, February strong and March so far is off to a good start, so hopefully that helps you a little bit..

Definitely thank you.

And then as we look at the $10 million of growth CapEx for the next year and you’ve outlined this in the past, are there any projects where you’re kind of underwriting, higher, lower return, any change there and then also just in terms of the overall CapEx number, any outlook and what these projects cost and if you think, can you spend a little bit more, you might get a higher return, just any update there..

Well in that $10 million but if I recall correctly we had, $400,000 of contingency and so far everything seems to be on budget, even a little under in a couple of cases, there might be a little over in the beach club, but I think we’re well within that contingency number that looks like the ferry boat is going to be maybe $200,000 less than we had budgeted and so, I think we’re in good shape on that.

We’re looking at putting a new food outlet in the Silver Slipper. We’re right next to a fishing port and it turns out that fishing port is oysters and in fact our landlord is locally known as the oyster king. Apparently he pulls more oysters out of the ocean than anyone else in the United States or something.

And so one day Lewis and I were, one of these managers being headquartered in Las Vegas, we went up to lunch and ended up at the oyster bar down at Palace station, found out they have like an hour wait, I thought, look at this thing.

It’s nice little bar, you’ve an hour wait and they’re open 24 hours a day and so that’s evolved into, we have an area of the casino there where we could pretty easily put an oyster bar and so we’re kind of crunching the numbers on that at the moment, that’s probably $250,000 and it’s not in that $10 million.

So I mean the fact that we had this list of stuff, that’s the $10 million doesn’t mean that’s all we’re doing and when we - constantly are looking for other stuff and frankly we generate free cash flow we can pay for that oyster bar at free cash flow pretty easily and so it’s not - and if you look at, we ended EBITDA about 18 and property EBITDA like 21 something..

You’re around 18, if you include a full year Bronco Billy..

A full year Bronco Billy’s and you think you spent $10 million, well I think all the stuff we identified with that $10 million is pretty high return stuff.

I mean unlevered 20% to 30%, I mean some of it you’re just guessing but there was an article in the Anderson Ferry on their anniversary the other day and it had a number because they’re private company and so they average over 200 cards a day on the Anderson ferry and I don’t know that we’ll get a 200 cars a day on our little ferry boat.

But just play with the math a little bit and say, what if they only get 100 cars a day and maybe only 30% of those end up going into the casino and I will tell you the gate counts, so you can get it from the Indiana Gaming website, we got about $50 to $65 per person in casino revenues for each person who walks in.

so if you start playing with those numbers and say how many cars a day are going to take this ferry and how many, what percentage of those end up in the casino parking lot and then two people per car and $60 a person, it could really move the needle and it could move the needle a lot and we’re all guessing a little bit because driving down and taking a ferry isn’t quite the same as driving across the bridge and so on.

But I think by any measure it’s positive.

So if you assume, you spend $10 million and maybe average 20% to 30% return on that, that’s $2 million to $3 million of incremental income which should push that EBITDA from 18 to 20 to 21 and frankly some organic growth and I think we end up in the low-to-mid 20s couple years from now, but that’s little bit of a guess.

Going back to your earlier question and I’m going to answer your earlier question about Donald Trump being elected in a little different way, we don’t have a place here in Las Vegas, but of course we live here.

And I remember quite solidly when Obama first came into office, we were in the edge of this big depression and he I think inadvertently made some comments that nobody should go on boondoggle up on Las Vegas you’re supposed to be careful with your money and it destroyed Las Vegas.

I mean there were conventions that just pulled out because they were afraid. I remembered Goldman Sachs had a big conference that was scheduled at the Venetian and they walked from a big deposit and paid a premium price for hotel rooms in San Francisco because they didn’t want the appearance of having a convention in Las Vegas.

So you’ve gone from eight years of it was bad to be rich and now you got a cabinet where half of them are billionaires so I guess it’s good to be rich.

And I don’t know if that affects as much in the regional markets, but I don’t think there is any question, if it’s positive for Las Vegas and I don’t mean to cast any aspersions on whether Obama was a good President or a bad President, whether you’re Republican or Democrat, but I can tell you that what he said when he first get into office really kicked this place in the stomach and I’m guessing that having Donald Trump as President is probably a positive to Las Vegas, but I don’t think it has much impact on us..

Okay great and just a last one from me. So on that number of EBIT that you kind of outlined, I mean is there a magic number that you think you need to get to through this year your average weighted interest expense cost..

I think we can get there now to be honest. I got here in December 2014 and Lewis was not long after me. December 2014 was not a very good year for this company, it’s part of the way on the proxy battle [ph] if you will and then you had 2015 where we showed that we would get every single property changing direction.

Everything started to go up, instead of down and now in 2016 we have a second year. So if you look at it and say it’s not a fluke. It wasn’t just accounting stuff we did or something, we now had two solid years of improvement at every property.

And then you know you look at it and say this is a dramatically better credit then it was even a year ago and so I think we can save on the interest expense today and frankly, as the numbers - our blended cost of debt is like 9.6% today and it’s half of good as bank debt and pretty low price and half of good as second lien debt a very high price, ends up to about 9.6%.

I think we can get a 200 basis points out there, 150, 200 basis points in today’s world. I think if we had EBITDA of $23 million and our net debt today is like 75. So if we got to three times net debt, net debit three times EBITDA, we’d be down at 6% rate, right.

So I think that’s probably another refinancing two years from now, so I think it’s a process of improving the balance sheet and going back and improving the debt and improve the company’s financial and then go back and prove the debt and that’s what we did at Peneco [ph] over many years and even way back at Mirage Resorts we did the - when I went to Mirage it was all high yield debt, it was very expensive, it took us a while and we eventually did the very first bank deal in the whole industry and I remember it was like $40 million and we hoped like the golf carts out of shadow creek, we’re collateral for it and even we could find and four or five years later, we did the industry’s first billion dollar bank deal and we’re borrowing money at 4%, 5% and so we’re headed that direction, but it’s one step at a time..

Chad, not to talk your ear off but Dan and I [indiscernible] we pulled up our offering documents from a year ago from when we tried to do the refi and unfortunately we had some bad timing with the markets going south at the same time, but if you were to compare those documents then today, this company is lease and bounds, different back in the day we were telling lenders, you have to pro forma in full year for the hotel and you got at - Silver Slipper and you got a pro forma in Bronco Billy’s and you got pro forma this and now when you look back at it, this company is 51% better in EBITDA then when we came in 2014 at the end of the year.

It is a much, much better stronger and very, very different company. So we’re beyond please with where we are and I think Dan’s right. I think the time is, I think we could get something done now..

Recognize also the rights offering helped of course, I mean that was $5 million, it wasn’t bigger than that because we didn’t need more than that and in fact, at the moment we’re sitting on $25 million of cash..

27..

$27 million, of which about $12 million is used in operations.

We expect to use $10 million of that in all this CapEx but at the moment it looks pretty comfortable and frankly the lenders like to see that we did raise $5 million equity, did it very oversubscribed in the deal and that I personally wrote a $1.1 million or $1.2 million of checks and bought the stock and invested in the company even more than I was when we came in two years ago and so I think it’s a pretty good time for us to look at refinancing stuff and I’d like to do it, when we don’t have to do it.

If we wait too long, then we’ll be looking at that like a year from now, we’d be staring at the first lien debt becoming a current liability..

Okay, great. Thank you very much for the color..

[Operator Instructions] our following question comes from John Decree with Union Gaming..

Just wanted to - Dan if your prepared remarks you’ve mentioned ways that you might finance the new build like in Terra Haute and things be the obvious cash flow from ops, equity or conventional debt pretty clear, but wanted to get your thoughts on maybe some other levers that you might be able pull or other areas whether that be partnering or maybe trading an asset to fund a new project or an opportunity that might be a little larger than what you’re doing now..

Well let me, I mean hotel at Cripple Creek I kind of already said, I think we can do it normal way.

In other words like the hotel we built at the Silver Slipper we were allowed to borrow half of the class to build in that hotel, so we did something similar, we have a credit facility that funds half the cost and the other half is funded from cash flow, we generate pretty good cash flow.

So over a three-year period between now and the end of 2019 I mean that’s pretty easy, lot more complicated if Terra Haute happens, right and if you start looking at, okay how you’re going to go build a $150 million place and you probably need $50 million, $60 million, $70 million of equity on something that big and you start saying, well how do you do that, well okay it depends on where the stock price is, if the stock price went up on getting Terra Haute you might consider issuing some equity we’re a public company so we have that ability to do that but you don’t want to issue stock at the stock is at a low price and frankly I think our stock is pretty attractive at these prices.

So you start saying well what else could you do. Well we could sell the Silver Slipper to a REIT take back management agreement free up tens and millions of capital and use that and you could even do Terra Haute and partnership with the REIT.

You go to one of the REITs and say, how about you own the real estate we’ll manage it and there’s ways to do that. You could bring in a partner, do it with a partner.

Lots of people probably partner in a place like that, so we got lots of different ways to do it and frankly part of the reason Lewis and I are here, was when we had creative casinos and we’re trying to build $500 million place in Lake Charles and we ultimately did have all the money lined up.

It was not an easy thing to do because we didn’t have a company, it was really just Lewis and I and Scott here was helping us with the accounting [ph], he’s sitting at the table.

And we were running around thinking okay, we got to pay people during construction we have no ongoing cash flow, so you added into the project cost was kind of big pre-opening cost of having a company and then, you’d have to train people and you’d have to recruit people and all that stuff.

And listen I’ve built now I think 10 or 11 casinos all of which have been successful and it was always with a company, it was at Mirage Resorts or it’s the Pinnacle and there are resources you could call on, you’d say we need a food and beverage manager and what assistant food and beverage manager do you have? And whenever it’s just and Lewis and I, well I’ve 12 credit hours in cooking but going to Lewis and like Charles will be a chef.

So and I remember at one point, one of the bankers had proposed that we should look for a company like Full House to go merge creative casinos into to have a company and then I told the banker I said that’s a really a good idea except we don’t have time, we had to break ground by a certain time in Louisiana we were going to lose the license and I’m like, wow and it came home to us that building a project is a lot easier if you have a company for lots of reasons and even a small company.

Now having said that and I think you told me, John, right?.

That’s right, yes..

John and I had lunch the other day and he asked whether we were looking to swing for the fences or so on and I said no, I said look the basic story and you could run the math, is hopefully we get $23 million, $24 million, $25 million of EBITDA two or few years from now.

[Indiscernible] just gets old about eight times cash flow, they have a lot more properties than we do but the quality of the property is pretty similar to [indiscernible] and we’re in markets where there is barriers to entry and so on, so forth and so if you got to that point our net debt is probably at that point $70 million or something, you run the map, the stock can be lot higher than it is today, right.

And one of the mantras around here is do not screw that up, if that’s all we do, we’re very happy okay and we would have gotten a good returns and shareholders would have gotten a good returns and so on, so forth and we looked at number of deals.

There is a deal that’s been killing me because I think it’s a really good deal and that we should do it and we’re not big enough to do it and we’d be betting a ranch on it and so we won’t do it and I’d leave that for somebody else, but so something like Terra Haute, will it be economically successful.

I mean it all depends on the tax rates and all that stuff, yes I think pretty definitely. I mean you can look at how many people live there and what will be the [indiscernible] gamble and so on.

You can - there’s enough examples and experience that we have and others have that you can pretty accurately forecast what the casino revenues are being, what you do in EBITDA. You got to execute properly, you got to build it right, and it’s got to be [indiscernible], catch people’s imagination.

I’m always amazed how many people screw up, what should be easy.

Like start off by maybe hiring architect who’s build the casino before and if you execute properly and you can pretty much forecast that if we built $150 million place, there’s going to get a pretty good return and so I don’t really view that as that risky but still you want to be careful in doing it that you’re not bet in the company, yet you do it in a way that, is smart and so I think we have a pretty good thing going here, if we do nothing beyond just paying attention to the properties we have, and is going to be very successful.

So [indiscernible] first managers, we don’t want to screw that up..

Sounds good, thanks for the color. Dan..

Okay..

[Operator Instructions] And it appears there are no further questions at the time Mr. Daniel Lee. I’ll turn the conference back over to you for any additional closing remarks..

No that’s it. We’re having fun, company is doing well and thank you everybody for their support and for your time this morning. That’s it. Thanks..

Thank you guys..

That does conclude today’s presentation. Thank you for your participation, you may now disconnect..