Full House Resorts Inc (FLL) 2020 Q4 法說會逐字稿

Good day, and welcome to the Full House Resorts Fourth Quarter Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Adam Campbell, Corporate Controller. You may begin.

Thank you, and good afternoon, everyone. Welcome to our fourth quarter earnings call. And 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 the Federal Securities law. 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 discussions of risks that may affect our results.

Also, we may reference to non-GAAP measures, such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as the various press releases that we issued. Lastly, we are also broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release as well as our SEC filings.

And with that, I'll turn it over to Lewis, our Chief Financial Officer.

All right. Good afternoon, everyone. Really briefly, we are down one man today. Dan was involved in a small accident and -- he'll be fine. He's been working from home over the last few days. He was actually supposed to come into the office for today's earnings call. But there was a last-minute opening with his doctor to get some fixes done to his shoulder. And so that's where he is right now. So our apologies there, but he's doing fine and it means we get to hear some new voices on the call, like Adam's here.

So with all that said, quite a bit to go over. The most important would be our fourth quarter results. We preannounced our numbers. So I don't think the numbers will be a surprise to anybody. The important part is we were at the upper end of our expectations.

Consolidated revenues were down about 2% to $38.3 million. Adjusted EBITDA though increased in a very big way. For the fourth quarter of 2020, adjusted EBITDA increased nearly $10 million. That's more than 4x what it was in the fourth quarter of 2019. We went through a lot of the reasons why on last quarter's conference call, so I won't go through all of them again here today, but they largely come down to labor efficiencies, marketing efficiencies and more refined operating hours for our amenities where we're making sure that our hours match the demand for those amenities.

I do want to make 2 points on the cost structure, though. The first is that a lot of the improvement that you've seen over the last 2 quarters aren't COVID changes. They were changes that were in the implementation process prior to the pandemic shutdown, things like the new spot marketing system at Rising Star and our profitabilities that we installed back at the end of 2019.

That flat system is a good example at Rising Star. Before we put in that brand-new Konami system, we had a 17 year-old system. If we wanted to give you $5 a free slot play before under the old system, we had to go through a lot of stuff. We had to send you a coupon in the mail. You had to then go to the Players Club, show them your coupon, they look you up, make sure it was a valid offer, void the coupon in the system, and then they give you a voucher to take to the cage. At the cage, they then give you $5 in cash, and we would hope that you would put that cash into one of our slot machines. That was a lot of extra labor. It wasn't a very good guest experience, because you spent a lot of time standing in the line.

Today, under the new Konami system, you get the mailer, you don't have to bring anything in. All you need to do is put your player's card into the machine, your $5 of free play downloads to the machine automatically. That's it. It's a big change. And again, it's not a COVID change. It's one of those things that we won't go back to the old way because we don't need to go back to the old way and the new way is a lot better.

Similarly, under the old marketing system, it was beyond difficult for us to pull any useful analytics out of the old system. We could not easily tell you what was a good marketing campaign and what was a bad one. And so under this new system, not only can we tell you, but we can tell you in real-time if a marketing campaign is profitable or not. It's meaningfully easier to pull out all of our unprofitable campaigns, and we're doing it now in real time. And so all of that leads to the second point that I want to reiterate, that these changes are sustainable.

We've already logged more than 8 months with what we call our reset operations, and we think they're here for the long term. If you put all of that into perspective, really quick. For the last 6 months of 2020, we did $22.3 million of adjusted EBITDA. In those 6 months alone, we did 40% more adjusted EBITDA than we did for the full year in 2019. The third quarter tends to be a little seasonally stronger. The fourth quarter tends to be seasonally weaker. But between the 2, they should average out somewhere near a normal run rate, which is meaningfully above what you saw in any recent year for this company.

Going through the properties really quick. At Silver Slipper, we had an amazing fourth quarter and full year. We set a lot of new records there at the property. A year ago, we were thrilled when that property hit $13 million of adjusted property EBITDA for 2019. But here in 2020, it climbed even higher to $14.7 million of adjusted property EBITDA. That's despite 66 days of closure due to the pandemic. Those 2 months of closures led to a 15% decline in revenue, but we were diligent on the cost side and again, the biggest benefit was from the marketing side and from labor efficiencies that we rolled out at all the properties, not from ones we've already mentioned.

Silver Slipper continues to benefit from the physical investments that we made at the property, like the renovated casino, the renovated buffet, the Oyster Bar, the Beach Club. We took a small amount of damage last year during the hurricane season, but we do keep good insurance and so in real time, it's getting some more improvements, thanks to some insurance proceeds. We replaced our shingles on the roof with -- some of which blew off during the last hurricane season. Those are getting replaced with a much more durable standing seam metal roof. As part of our insurance plan, we also asked for a fresh coat of paint. And so we've updated the browns and the tans on the building to a more modern gray and white color scheme. If any of you have been -- the shutters on the beach in Santa Monica, you'll know exactly the color scheme we have in mind. And there was damage to our neon sign on the front of the building. So that's being updated to a new LED sign. That's not only much more durable, but also much more energy efficient. And so when all of that work is done, between these changes and the ones we had done in the recent past, it's going to look like a brand-new property.

This past Saturday, the Mississippi Gaming Commission gave casinos with green light to move back to normal operations. And we're happy to see the world slowly moving back to normal. But we also continue with many of our safety measures. At the buffet, for example, we continue to have our employees serve guests rather than have our guests serve themselves.

Rising Star, adjusted property EBITDA grew by $3.3 million. A big part of that increase was due to the Konami slot system that I already mentioned. And then there are other things, too, like we continue to not be able to operate the buffet at Rising Star. Can't write it off all right now. But quite honestly, it wasn't generating enough volume in recent years anyway to make all the extra labor and the food preparation work. Now that's why prepandemic, we built a new sitdown restaurant named Ben's Bistro. And prior to the shutdown, we had already pared the buffet hours to weekends. That said, I don't think you'll ever see the buffet at Rising Star again. It cost us something like $2 million per year to run. So we're saving a lot of money but no longer running it, and our guests are getting a much better experience with fresh food that's made to order.

We benefited also from a full quarter of one of our three sports skins. That's the Bet America skin from Churchill Downs, which they're currently rebranding to Twinspires. More recently, we had an easing of our -- of some of our operating restrictions at Rising Star. You can now eat again and smoke again as you sit in play at a slot machine. And then on July 1, in a couple of months, our gaming tax rate will essentially get cut in half. So we also have that to look forward to in the nearer term.

Our Northern Nevada segment continues to be the segment that is most impacted by the pandemic. It's also our smaller segment for what it's worth. At Grand Lodge, the convention and meeting business is understandably down as people socially distance. So there are fewer people in the hotel that make their way to our casino. There are also fewer people at the nearby ski areas, which are operating at limited capacity. In the near term, we're looking forward to Memorial Day, which is when the locals start to come back into town for the summer. Once that happens, we should be a bit less reliant on the hotel.

And at Stockman's, the really aren't groups visiting the nearby naval base for training. And a lot of those guests stay at the hotel that's right at the edge of our parking lot, without people visiting the Navy base, our business at Stockman's also feeling it. So those 2 factors led to the results that you saw. Revenue was down $1.1 million. We controlled costs wherever we could. So adjusted property EBITDA was down less than that, down only about $270,000.

And then at Bronco Billy's, we had a strong performance despite no table games. In Cripple Creek, no one has been allowed to reopen table games since the pandemic up until a few weeks ago. And so we went nearly a full year without tables, from March 2020 until nearly the end of February of 2021. That did affect our revenue by a little bit in 2020, with fourth quarter revenue declining by about 6%. Offsetting that was a full quarter of one of our three sports skins in about 1 week for a second skin that launched just prior to Christmas of 2020.

On the cost side, we implemented that same economic slot system that went into Rising Star. Between that and labor savings, adjusted property EBITDA went from a modest loss, a modest loss last year to a positive $1.7 million this year.

Elsewhere in Cripple Creek, I'm sure you're well aware, we're building what we are currently calling the Cripple Creek Luxury Hotel and Casino project. That's obviously a placeholder name. And I don't want to ruin Dan's thunder by giving you the name for the new place with Adam. But that new facility will be located next door to the existing Bronco Billy's Casino. It will physically connect. You can walk down the hall and be in the new building. As a guest, you can earn loyalty points and comps in both places as if they are one, but that all said, the new facility will have its own identity. It will be beautiful. And quite honestly, will be transformational for that Cripple Creek market and for Colorado Springs. We can't wait to tell you about all the finer details on that project, but it won't be today, unfortunately.

It's a bigger project than when we last spoke to you, because loaders eliminated betting limits and approved new table games, we increased the size of our hotel by 67% to about 300 hotel rooms. The team behind the scenes is -- we've worked on a lot of projects in our history. Dan, going back to the days at Mirage Resorts; Dan, Alex and I collectively at Pinnacle Entertainment. We work on projects like Barton Lake Charles. And of all those projects, I can tell you that this is the most excited that we've been for any project that we've ever worked on.

The excitement really comes down to 2 statistics. The first is the number of hotel rooms in Cripple Creek, there just aren't very many. The whole town only has about 300 hotel rooms to serve the 1 million people in the Colorado Springs, Canyon City and Playa theater markets. By the way, none of those rooms are high quality. It's a collection of mostly 2 star and a small handful of 3-star rooms. The other number that we look at closely is gaining spend per capita. It is extremely low for our market.

For gaming markets that are roughly an hour or so away, away from their feeder markets, you tend to see a gaming spend per capita figure of around $300. You'll see that in places like Washington, in places like Kansas City and St. Louis, the number is even higher. For Cripple Creek, we're sitting at half of that. It's $146 per person per year. And not only is it half of where it probably should be, but it's also $50 below where the national average is, which includes states without any casinos at all. It's not low, quite frankly, because no one offers anything nice in town. If we can get that gaming spend per capita number up to $300 -- sorry, go back a second. If we can get that gaming spending per capita figure not up to $300, but just up to the national average, we will have earned a very, very healthy return on our project without affecting anyone's business at all in Cripple Creek. Helping this out will be the fact that the population in that state and in Colorado Springs continues to grow pretty healthily. And then things like median household income are also quite strong.

Regarding the construction, we are back at work. The storm sewers are underway. The related utility work is also being handled right now. That will take a few more weeks to get done. We are on the verge of going out and starting work on some test micro piles very shortly, and then we'll start with the real piling, micro piles work right after that.

In the near term, the cash spend on that project isn't very big. So for all of 2021, you might see something like $40 million of cash invested into the project. But because we prefunded the cost of the project with our recent bond deal, and we're already paying interest, we are anxious to get it done as quickly and as efficiently as possible and should see that place open up by the end of next year.

The firm building it, Hensel Phelps, is one of the largest general contractors in the U.S. They're actually in Colorado. They're headquartered just outside of Denver. They know how to build a mountain town, they actually built the Ameristar facility in Black Hawk, Colorado. And so we're excited to be working with them. And looking over to Homelink in real-time here. We usually have a construction cam up on the website. We're in the process right now of updating that construction cam and likely adding a second one. But you wouldn't see very much right now anyways with the outwork that's going on. But very shortly, you'll see not just one but two good views of that project.

A lot of stuff. Sports skins. Our sport skins continue to roll out. Just before Christmas, as I mentioned, Wynn launched their mobile sports betting app in Colorado. That puts us at 3 live sports skins to currently, with the other 2 being Smarkets, live in Colorado, and Bet America, live in Indiana. If you were to take those 3 skins and annualize the revenue, it's $3.5 million per year of contractual revenue with no meaningful expenses attached. So it's essentially $3.5 million of EBITDA. That leaves us with 3 skins left to launch, Wynn in Indiana, Smarkets in Indiana and then the online skin for Bet America in Colorado. When all 6 of those skins are live, the annualized revenue will be $7 million per year and still with no meaningful expenses attached.

We continue to think, by the way, that, that -- those approvals will be soon. It is quite a process to get things approved, as it should be. You've got to go through the testing labs, the people and the entities involved will all have to get approved by the gaming commission. And then things got slowed down by the pandemic as well. But it does feel like our partners are in the home stretch to get their (inaudible) launched. And the good news is everyone is moving as quickly as they can behind the scenes.

Regarding the balance sheet, a little more than 3 weeks ago, we issued $310 million of new senior secured notes. Those are 7-year notes due in 2028. They were our -- not our, but I guess, Full House, with Dave Yoshi, with the high yield markets. The proceeds will be used for a few reasons. The first was to refinance all of our existing senior secured notes. We had $106.8 million existing under the old notes. We had to pay a modest 90 basis point call, 90 basis point call premium, some accrued interest as well up to the redemption date. Those old notes were floating rate notes. They were at LIBOR plus 700, with a LIBOR floor of 1%. So they were effectively 8% floating rate notes that were likely to go higher in future years. The new notes that we have aren't floating. They are fixed with an interest rate of 8.25% and then we have a big positive for these new notes. They don't have a quarterly leverage test that we have to meet like under the old notes. Under the old ones, if you recall, because of the 3 months of pandemic shutdowns, we ended up having to pay for waiver fees in each of the first 3 quarters of 2020. We won't have that anymore without that quarterly leverage test.

We used $4 million of our bond proceeds to take out all of our warrants. Those warrants were out there. We could have given the holders the chance to purchase 1,006,568 shares of our common stock at an exercise price of $1.67 per share. If you use the closing price of our stock on February 12, which was the day we completed the warrant redemption, the net repurchase price for all of those warrants would have been more than $6 million. They could have been outstanding until their expiration in 2026. And if so, I strongly suspect that the repurchase price would have been meaningfully higher. We didn't buy them for $6 million or higher. We purchased them for $4 million. And so we're happy with the meaningful discount that we got on that repurchase relative to where the stock trades today. And we're happy too, because getting rid of those warrants really cleaned up the balance sheet.

The most important use of proceeds was to fund our Cripple Creek growth project. There's $180 million of remaining project cost to complete it. And so we put $180 million of our bond proceeds into a construction reserve account dedicated to its construction. And we paid for expenses related to the deal. And after all of that, we had about -- we had about $8 million of cash left on the balance sheet.

From a liquidity point of view, we have more cash than we've ever had in my history at this company. At the end of the fourth quarter, we had $38 million of cash. That compares to $34 million at the end of the third quarter. And then sitting here in real time, we have about $232 million of cash. That consists of the $180 million that I mentioned, that's reserved for the build-out of the Cripple Creek project and then another $52 million of normal cash and equivalents.

To give us additional liquidity, we've also been working behind the scenes on a $15 million revolving credit facility. I was hoping it'd be done before this call, and it won't be that much longer. I think it's only another week or so. There are some last, small documentation issues that we're getting through, but it shouldn't be very much longer. When we do close on that revolver, it will be undrawn. And it's really there to provide us with any additional liquidity should we need it and to help facilitate things like ordinary letters of credit that we might need to post.

I feel like I went through a lot. I'm going to look over at Adam. Anything I forgot?

No. That covers pretty much everything.

All right. So with all that said, operator, let's take a few questions.

(Operator Instructions) And our first question today will come from David Bain, a private investor.

Lewis, congratulations on another great quarter and definitely hope that Dan feels better very soon. My best wishes to him. And I know he's got a ton of energy, so it's probably hard to hold him down, even with doctor's orders.

I'm sure he's fighting right now to get out of -- his doctor and get on this call, but I will let him know. He'll be fine. He's doing well.

Okay. Great. So I -- you hammered this home really well, but I just want to confirm. So if we average the seasonally weak 4Q and then 3Q, that's kind of a fair go forward from here, just prior to pent-up demand, maybe the new skin launches, the stimulus and the tax release. I just want to make sure I'm getting that sort of basic down.

Yes. No, no, that's a good question. And the short answer is, yes, I do think you're right. I mean, from our shoes, we were -- we've been scratching our head a few times where we thought that maybe when sports came back, things might settle down a little bit, and you had more sports on I think in anyone's history, all at one time, and things are fine. And so we're kind of sitting here today and looking at things. And I will tell you that our best customers has been coming by about 1/3 less than usual. That's kind of 50 plus. And they more -- their absence has been more than made up for by younger guys, 30s, 40s that have been coming in and playing in our casinos and signing up for the players club, for what it's worth. And so to the extent that you see some of the 30s and 40s play go away, I'm not saying that we will, by the way, but to the extent that you may see it go away, the good news is that our best customers should also start to slip back in the door as vaccine distribution rolls out and in a big way. And then we've got a few -- I feel like we have more things to -- more ways to grow than things that might go away, for what it's worth. Even if some play does manage to go away, we still have 3 more sports skins that I think we'll launch here very, very soon. That's not in the annualized number.

We've got -- we do have that gaming tax reduction at Rising Star, that's going to be something like $2 million, $2.5 million a year. That will save going forward once that kicks in on July 1. And so there are little things yet still that will be additive. So I don't think you're thinking about it in the wrong way. I think you're right. I think you're thinking well.

Okay. Fantastic. Yes. I would think the best customers will be the first to be vaccinated, so hopefully, they'll be back very soon. On Cripple Creek, so it sounds like construction disruption at Bronco Billy's to be mitigated, just given the configuration. If I'm thinking about that, and I'm excited for the luxury offering, scratching the math on it.

Just given the investment draw that you're creating, does Full House have any strategies overall for Cripple Creek in terms of land purchase options or a strategy for the strip beyond the facility? Or is that a little premature to speak to at this point?

There's some stuff we're working on behind the scenes. So it's not going to be a completely disruption-free construction process, unfortunately. There's parking that's going to go by the wayside as we -- the new building will take over some of the existing surface lots. And so right now around town, we signed up a few leases to just get some extra lots for parking while the building is under construction. The hope, by the way, is that, that garage may be done sooner versus later. And if so, we could actually let people start parking in that garage before that full facility is done. There's -- there are -- there is a building that does get torn down. It has some rooms in it. So we're going to see some rooms that go by the wayside. But we never have that many rooms to begin with, for what it's worth. We only had 36 total rooms. And so I think we'll be able to navigate that decently. That all said, if I had my druthers between minimizing disruption or getting it done quickly, we're going to err on the side of getting it done quickly, for what it's worth.

For the existing parcels that we have, we have quite a bit -- actually, on both blocks, but not only on the main block of Bennett, but on the street behind on Carr, we've got quite a bit of room as well. And so down the line, we actually could go and add more hotel rooms if we wanted to. But at this point, I think we've sized that project appropriately. And you heard me say, we're now man, we're excited to see that thing get built and get done. We think it's going to be a big deal. So we're moving up there.

Yes. And if I can just get one over -- and then I'll yield, I promise. Just on iGaming in Indiana. Do you think any license access fees would still potentially net more royalties to you? And just if you're granted multiple skins, would you look to be potentially active with one of them? Or is that just not the strategy?

We -- go ahead, Alex. Go ahead.

Yes. No, David, it's a good question. There was legislation that was introduced this year in Indiana, that would have allowed 3 online casino skins, the legislation did not advance this year, but we expect to be reintroduced next year and we extend a pretty good shop, we think. We would definitely look at possibly doing one of the skins on our own brand as an online casino. And then we definitely believe we can monetize at least 2, if not all 3 of those skins on the comparable way to what we did with the sports betting.

Yes. The important thing to keep in mind -- hey Dave, really quickly. The important thing to keep in mind with our current sports skins is they -- we -- the contracts that we have in place for all of our sports skins in Indiana and in Colorado, they only include the sports piece. They don't include the rights to any true casino, so slots or tables or whatever it is online. And so we do have the ability to continue to monetize it, however we end up doing it, so. Good question.

And our next question comes from Ryan Sigdahl with Craig-Hallum Capital Group.

I send our best wishes to Dan so that to help heal up. Curious on lucking in, what's the latest you've heard there? Our checks indicate board is still looking for an investment banker. That was around a month ago. So I don't know if there's been anything more recent in the process. And then kind of best case scenario, how early do you think we could get the termination there?

I'll let you go again, Al.

Sure. Yes, no, great question. The game board has their next meeting actually in 2 days on Wednesday, so we'll see if there's any updates, but you're absolutely correct. They're still looking to retain an investment bank or to help them analyze the 2 competitive license applications that they have. One of them is Waukegan, the other one is for the southern suburbs of Chicago. And the Executive Director of the Gaming Commission, the gaming board rather, previously noted that he thinks it's probably about a 6-month process from the time they hire that investment banking firm to help analyze the applications. So we're probably a good 6 months out, we think, from them making a decision.

As the second part of your question, I don't recall.

No, that pretty much covers it. Wait and see, 6 months. That outside of Cripple Creek and Waukegan, are there any other projects that you have on the table that you're considering? And then sounds like some nice upgrades, feel good about everything else, but anything else to the properties you currently have that you'd like to make?

Yes. We -- well, for what it's worth, we are laser-focused on this Bronco project. We -- of all of the products we've done in our history, it's actually one of the smaller ones. But nonetheless, are super focused on it. Want to make sure that it gets done well and successfully and the launch is the way we think it should. Behind the scenes, we've long talked about, at least internally, long talked about going and doing a modest room expansion over at Silver Slipper. The process there takes a little bit of time because there's an existing pier at our property, and we will look at putting the hotel -- the new hotel tower out over that pier and so it's a little bit of back and forth with the government entities as well as some mitigation of marshland that we have to do over there. But -- so that's something we could do a little bit down the road. But no, no, we kind of know it. And then otherwise, we keep our eyes wide open on everything, but nothing to report to you right now.

And our next question comes from Chad Beynon with Macquarie.

Congrats on the bond deal and the results here and also Dan, speedy recovery wishes. Wanted to just ask about margins. I know you guys have talked about taking EBITDA to the bank and not margins, but just curious in terms of when some of these customers come back to the properties, there's probably some additional cost creep, probably not much, but a little bit of that comes back. You guys posted 28% margins in the back half of the year. Not that you're giving guidance, but can you kind of help us think about what a good margin profile could be? Could you -- can you continue to post something in the mid-20s? Or should this drop just as we get through a different period?

Yes. No, no, that is a good question. I do think that a margin for us should be -- that we can have margins in the mid-20s, for what it's worth. You are right, there is the potential for some cost to come back into the system and is a good example as table games come back more and more. Tables tend to be a lower-margin business, but you do it because it's additive to EBITDA. We haven't -- or we just got back tables at Bronco Billy's a few weeks ago. We haven't been running the tables at Stockman's, even though we could, but it didn't -- doesn't make sense currently. And so there are some pads where the margins could creep down.

I would tell you on the flip side, we have a lot of costs that are elevated that go away. So we've got a lot of extra costs of people standing at the doors, taking -- doing thermometer checks before you enter the casino. We've got extra costs as we have people running around doing sanitizing of all the equipment quite often. And so there are some expenses on the other side that go away. I will tell you that -- well, we listen, I know you guys listen to everyone else's conference calls and it's nice hearing our competitors also talk about how they think that we've all over marketed in the past. And I think they're right. And so that helps out. But the big point that I tried to make at the very beginning of this call was we just have a lot of changes that aren't COVID changes. They really are things that were being put into place prepandemic, and those don't change. And so I feel good. I feel good where we are. Mid-20s is not a bad spot to be.

Okay. Perfect. And then you obviously talked about all the internal options of growth here, and we're still waiting on Waukegan and Cripple Creek, you'll certainly have your hands full with that. But now that the balance sheet's in a great shape, your stock's near an all-time high, how are you thinking about some of the smaller potential tuck-ins that were probably always marketed at maybe higher multiples than where you were trading or you just didn't have the cost of capital to maybe do those. Are those still important in terms of the vision of Full House? And if so, is there a type of property that would make sense, something with low CapEx or maybe an opportunity to kind of do something like what you're doing at Cripple Creek? Just kind of curious how you're thinking about the next couple of years with regards to that.

Yes. There's not a big push for M&A on our side, for what it's worth. I mean, a lot of the assets that end up getting shopped around are -- what we spent a lot of time doing is scratching our heads and saying, why are they trying to sell this asset, right? And so we -- sometimes, you have assets that are getting shopped around and they're required to sell them. But then you have to worry, right, was this property starved of CapEx? Was it -- do they take all the good talent out of the property and kind starved it of the HR talent, if you will. And we go through a lot of those reasons in our head -- or heads, I should say. We -- when we bought Bronco Billy's, it was a little bit of a different scenario. It was a seller -- a group of sellers that were, I think, in their 80s, if I recall, right, Alex? And -- but they were on the older side, and they were really thinking about estate planning, more than -- and so the reason for them to sell was a good and natural one. And that's why it was exciting to us. So we -- I mean, we're fortunate, we get every pitch booked under the sun. We have bid on things. We try not to chase up bids. But -- and we have our hands full. So we'll continue to look. I -- don't hold your breath on us buying something anytime soon, though.

Our next question comes from John DeCree with Union Gaming.

And John, before you before you ask your question, John, I just want to tap on to my last comment really quick. I mean, we've really been at this company, not for any reason other than to try to do good and smart things. And so there's no ego involved. We don't need to be out there trying to build the biggest casino company in town. That's not the mantra. The mantra that we have is, just do smart things and try not to do anything dumb today is really what we say on a daily basis. So anyway, a little postscript. Sorry, John. Hello.

No worries. You took the question right out of my mouth. I'm kidding. But on the note of working on smart thing, you've talked about some of the things that you've implemented operationally that has started to pay some dividends like the new slot system. And I guess another way of asking the margin question. Is everything today where you want it, in terms of things that you were working on pre-COVID operationally? I mean, is there any of your properties left where you can implement some best practices that you haven't gotten to or make some tweaks or changes? Or do you feel like the portfolio operationally is kind of all -- kind of operating the same playbook right now?

I think there's always more that you can do. So Northern Nevada is our one group of properties that aren't on the economic system. Then I feel like I'm a walking logo for Konami these days, but we now have it everywhere but Northern Nevada. We know how to use that system extremely well. And we do plan on installing that system in Northern Nevada. It's probably going to be, not first or second quarter, but maybe third quarter of this year, that we'll get that installed. They've got a pretty healthy backlog before they can get around to us. But I think that's going to help out in a meaningful way. We're always going to look for more and more ideas, so stay tuned. But as of right now, we feel pretty good about where we are, absent a few things like that.

Understood. And I'll throw a line in order to do a little fishing here, on the current quarter. I know you entered a property review. You've kind of made a little bit of discussion. But big picture, as the quarter progressed, we've talked -- heard some closures and stuff in the 4Q had impacted demand a little bit or capacity restrictions. Coming out of fourth quarter, do you have any kind of high-level comments on the way demand has trended, kind of portfolio-wide at a high level? Has it been similar to what you've seen in the 4Q? Is it -- has it gotten better? Worse? Anything that you could give us would be helpful.

Yes. Yes. The -- well, it's good news. So first quarter has been more of the same as 4Q. First quarter, like the fourth quarter is a little seasonally slower. We did have a pocket in February, where we had some ice fee and snowy weather that took out a lot of people's properties, unfortunately. So down in New Orleans, they felt the cold snap. We had a lot of snow at Rising Star. We had it at Bronco Billy's and so there was about a week where the properties really didn't have anyone in the building. But strip out that week, and I will tell you that January and February, we're pretty pleased. Even Northern Nevada, by the way, and I say this cautiously, I'll knock on the wood on the table here, but even Northern Nevada in recent weeks, feel like it may be starting to turn around and go the other way. And as you know, that was one -- our one laggard, but it's starting to hopefully show some signs of going the other way here in the nearer term.

And our next question comes from Stephen [Branstetter] with ABL Investments.

Congratulations, gentlemen, great quarter. Just 1 quick question. I think all my other questions were asked by the other gentlemen. Are any of your competitors in Cripple Creek looking to kind of size up a hotel like you guys are doing? Or are you guys going to be the big king in town?

We will be the big guy in town. The -- there is a competitor that's building their own hotel right now, but it's being built to be a bit more 3 star in quality. Century has talked about in the past about expanding, but they haven't broken ground. They ended up doing some acquisitions and expanding out in Canada, I believe, so they're -- they got a little preoccupied with other things. So you may see them expand out later with their Cripple Creek plans. And then a group of casinos across The Street called Triple Crown, have not yet launched either. But when you look at everyone, ours, I think ours are the only really, I don't want to say distinguished, but we do believe that we stand pretty decently apart from everything else in town, even with some of the new stuff that's being proposed or under construction.

And the one that's being built, Alex, correct me if I'm wrong, I want to -- it's only 100 rooms, I believe. Yes. So it's not a monster facility.

Well, you do kind of want to build up the area and the more people that come, the more popular the area becomes. So having the competitors go, is actually possibly a good thing.

We absolutely agree. Yes. More rooms are better.

We don't see the competition at all. We don't see the competition at all. We welcome more hotel product into the market, for sure.

And are the roads set up to handle increased traffic?

They're actually pretty good roads. There are 2 ways that you can get there. There's -- if you're coming from Colorado Springs, you go through, there's a road that you could take that goes along the shoulder of the mountain there or if you go maybe 5 or 10 minutes past that, there's actually a pretty easy road into town, into Cripple Creek. So you've got 2 actually pretty good options. The town has always gone out of its way to make sure that those roads are pretty well kept. They get a lot of tax revenue from the casinos. And so they're incentivized to make sure they're in good shape. And time flies by during this pandemic, but I think it was 2 years ago, they won and repaved that entire path along the mountain side there. So no, it's in good shape.

The other thing that they're working on behind the scenes is, that last bit isn't lit. And so there's been a proposal going around to actually put in some lighting to make that path even easier. But it's actually a good road. It's in good shape and freshly paved.

Great. Circling over to Indiana with the ferry. Are you now marketing over in Kentucky with the, I guess, the Konami system?

We are. Yes, yes. That ferry actually is doing pretty well for us now. If you look at the monthly cost of that ferry relative to the revenue, same-day revenue that we get from people that ride it. And it's actually doing quite, quite well. We can still and need to market a little bit more, but it's in good shape. Right now, if you go and you want to take that ferry, we actually make you swipe your players card, so we can keep a pretty good record of who's going on that boat. We didn't do that for the first, I don't know, 6 months, 9 months or so, as we were just getting people accustomed to that ferryboat being around. And we're still going through that process where a lot of people don't know that, that ferryboat is there. But these things change in time. And I think once you take it, it's actually a pretty nice and easy route. It's a good path, so.

Great. And now, with the Konami system, are you guys looking to be upgraded to cashless wagering? Is that something in the future? Or how would you handle that?

We are actively -- yes, yes. No, no, good question. We are very actively looking at it. We've been looking at cashless at the slots, and then also, I think the better thing would be cashless at the table games themselves, where you could actually bet at a table game. You basically have a mini iPad in front of you that you use for your chip bets. When you cash out, you'd have a TITO ticket that you could then put in -- you could put into a slot machine, or you could just cash it out like normal, versus chips where you only can take them to the cage and then maybe you'll gamble a little more on your way out, maybe not. But no, cashless is quite, quite interesting. And not a lot to tell you quite yet, but we're pretty actively looking at it.

Well, I'm thinking more cashless like right through your cell phone. I mean, is that something that, just to make it less people touching?

Oh, I got you. Yes, yes. No, no, still looking at that, too. Still looking at that, too. That process is -- all these processes are a little more complicated because you've got various state gaming commissions that have to work through their approvals. But all of it is interesting, and we think, look, we'd love to do any of that stuff as soon as we can. So we're paying close attention.

And the last 3 skins that haven't launched yet? Are they close? Or you're still just in the process?

No, I think you're -- go ahead, Alex. Go ahead.

They're all very close. Churchill has, I believe, in their last earnings call, they publicly said they expect to be live in Colorado before the Kentucky Derby and the other 2 (inaudible) were in constant communication with them, they're both working on getting their (inaudible) approvals, and they're pretty close.

We have maybe time for 1 last question here.

Absolutely, sir. That question will come from Kenneth Pounds with Castlebury Advisory.

Yes. It's great to see the good job, great to see the -- getting rid of the warrants. It seems like that will save you guys. So I think, I guess, to put a number on it, because it moved around with the stock, but I guess, at least $7 million or $8 million this year? Is that correct?

It's all -- it would all depend on where the stock price goes for around. So yes, it's a function of that. But I admire where you think the stock price goes. So -- no, but you are right. It does make -- it makes the balance sheet pretty darn clean, makes the income statement way easier as well, because we always had to make adjustments to diluted EPS for those warrants. And so it's going to be way, way cleaner from here. So we're excited to take them out.

Another small thing, with the debt, is there like an early redemption option on that at all?

On the new notes that we just did?

Yes, yes.

Yes. So those will be -- those have a no call 3 period, and then we kind of go into a standard call after that, where it's half the coupon in year 4 and it ticks down after that. So we'll be -- we'll have those notes for a little bit of time. But we're okay with that. They were honestly largely for the buildout of that Cripple Creek expansion. And as you know, that won't open up until the end of 2022. Then we'll have a period where that project will ramp up. And so we wouldn't normally have taken them out well inside of that 3-year period anyway.

All right. And just lastly, I know you guys are based on (inaudible), where I am. Is there any -- do you -- are looking at a Southern Nevada property?

No, probably not. We -- the benefit that we get here in Las Vegas is we do enjoy being able to walk down to IDT or (inaudible) games or whoever it is to look at their latest product right in their factories, and when it comes to auditors, right, everyone in town knows gaming quite well. So it's nice to be in the mix of at all here in Las Vegas and have real-time access to what works and what doesn't. When it comes to Southern Nevada casinos, we feel The Strip is a bit difficult to compete in, especially right now as you've got a -- puts people socially distanced, for what it's worth. I personally don't think you're going to see much of a -- I don't think you're going to (inaudible)

I was thinking more on some of the -- I was thinking more of some of the local type things that are on south or southeast, southwest side of the city type of idea. I guess you're building in New (inaudible) or Red Rock, somebody told me.

Yes. Yes, yes. No, no, good question, too. And even there, it's on the lower end of interest for us because you're from a station -- Red Rock resort, I guess now, does a very good job with their locals business. They would be hard to compete against. We're kind of happy with where we are. Look, we take a look at everything. But if you had to order markets, those 2 Strip and Las Vegas locals for us, is going to be at the lower end of the list, just because (inaudible) is a monster. So they did do a great job.

Well, that all said, I guess, thanks, guys. We -- little unexpected with Dan gone today. But as I mentioned, he's going to be great. We'll have him back here. Knowing Dan, he'll be back here tomorrow. So our apologies, but thanks for everything, and we'll talk to you next quarter.

Well, thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.