Lots of good developments out of FLL last few months.
1. Gulf Coast gaming reports point to mid single digit YOY growth, this bodes well for their top property Sliver Slipper. The hotel has also been sold out every weekend since opening, i think this will hit the upper end of their projected EBITDA targets.
2. Rising Star renovated into a "Christmas Casino" over the holidays and gaming reports from indiana show the Rising Star saw 13% growth in gaming revenue in November and 21% growth in December. This one of a kind Christmas Casino I think will prove to be a nice surprise when earnings are reported in Mid March.
http://www.in.gov/igc/2803.htm
http://eaglecountryonline.com/local-...istmas-casino/
3. American Place, the new casino and lifestyle center proposal Dan Lee submitted to
over the summer received support from a feasibility study recently. This is just an option right now but could be a great win for FLL.
http://www.insideindianabusiness.com...rport-terminal
4. FLL along with the Hyatt are renovating the casino at Grand Lodge. Specifics haven't been released yet but with Dan Lee you can be sure he has some unique ideas planned here, his ideas so far have been very outside the box and I love it.
http://finance.yahoo.com/news/full-h...133000223.html
5. FLL acquired Bronco Billys casino in Cripple Creek, CO for $30m or 6x EBITDA, funded 100% with debt. This hasn't closed yet and will be dependent on FLL successfully refinancing their debt which they haven't yet announced. They said early 2016 so should be any day now. Dan Lee has also referenced the possibility of expanding the casino here and also adding a hotel.
http://finance.yahoo.com/news/full-h...131500245.html
Assuming the acquisition goes through, i think FLL is a $24m EBITDA company going forward
Silver Slipper: $10m
Silver Slipper Hotel: $4m
Rising Star: $5m
Bronco Billys: $5m
Stockman Casino: $3m
Grand Lodge: $1m (probably upside if they are investing $ in renovating/expanding)
Corporate: (4m)
American Place Proposal Option: $0
Total: 24m EBITDA
Stock: $1.36
Mk Cap: 25.8m
EV: $87m + 30m debt from acquisition: $117m
EV/EBITDA: 4.87x
I think their best comp is MCRI which owns 2 properties and trades for 7x EV/EBITDA
7x * 24m = $168m - 91.3m net debt: $76.7m / 19m shares = $4.03/share (196% upside)
The super upside case is this:
Silver Slipper: 10m
SS Hotel: 4m
Rising Star: 10m (they said they thought this was possible)
Bronco Billys: 6m
Stockman: 4m
Grand Lodge: 2m
Corporate: (4m)
Total: $32m + optionality from American Place proposal + expansion/hotel at Bronco Billys + whatever other ideas Dan Lee will inevitably come up with.
$32m * 8x = $256m - 91.3m net debt: $164.7m / 19m shares = $8.66/share (537% upside)
There is obviously lots of debt here and they still need to refinance their current debt to really get the ball rolling here. I wouldn't put more than 5-7% of your portfolio in this name because there is real risk of loss here but I think there is a clear path to value creation and continued reinvestment in the current properties to improve profitability for several years to come here. I think if they hit that $24m EBITDA number, people will really start buying into Dan Lee as a manager and will reward the stock with an EV/EBITDA multiple higher than 4.8x. The debt will provide the jet fuel for the stock in this turnaround.
Last edited by BCI23; 02-09-2016 at 10:10 PM.