Bally's (BALY) - 2024 Q2 - Quarterly Results

Second Quarter 2024 Results Financial & Operational Highlights Bally's reported a 2.5% year-over-year revenue increase to $621.7 million for Q2 2024, driven by a 94.7% surge in North America Interactive revenue and a 3.0% rise in Casinos & Resorts, tempered by a 7.4% decline in the International Interactive segment, while the company's net loss widened to $60.2 million, alongside key strategic developments including a $2.07 billion transaction with GLPI and a definitive merger agreement with The Queen Casino & Entertainment Inc Q2 2024 Financial Summary (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue | $621.7M | $606.2M | +2.5% | | Casinos & Resorts Revenue | $343.1M | $333.2M | +3.0% | | International Interactive Revenue | $229.4M | $247.8M | -7.4% | | North America Interactive Revenue | $49.2M | $25.3M | +94.7% | | Net Loss | ($60.2M) | ($25.7M) | Worsened | | Adjusted EBITDAR | $161.8M | N/A | N/A | - Announced aggregate transactions with GLPI totaling $2.07 billion, which includes $940 million in construction funding for the permanent Bally's Chicago Casino[2][3] - Entered into a definitive merger agreement with The Queen Casino & Entertainment Inc (QC&E), where Bally's stockholders will receive $18.25 per share in cash or can elect to retain their investment[2][4] - Demolition and site preparation are underway for the permanent Bally's Chicago Casino, which has a new site plan featuring a single-phase 500-room hotel tower[2][8] Management Commentary Executive leadership highlighted the portfolio's resilience and strategic progress, with the CEO emphasizing strong growth in North America Interactive and the UK offsetting challenges in Asia, while the President noted continued progress on the Chicago development and underlying growth in the core casino portfolio, and the CFO reiterated a focus on cost optimization and operating efficiency - CEO Robeson Reeves noted that solid results were driven by growth in Casinos & Resorts, North America Interactive, and a record performance in the UK, which was offset by declines in Asia and other international markets[3] - President George Papanier stated that excluding market-specific impacts and the Chicago ramp-up, the rest of the casino portfolio grew 3% year-over-year, demonstrating its resilience[8] - CFO Marcus Glover emphasized that the diversity of the asset portfolio enabled healthy financial performance despite property-specific headwinds, with a continued focus on optimizing the cost structure[8] Segment Performance Casinos & Resorts The Casinos & Resorts segment revenue grew 3.0% year-over-year to $343.1 million, primarily due to the ongoing ramp-up of the Chicago Temporary Casino, though segment adjusted EBITDAR declined 10% to $99.8 million, impacted by the Tropicana closure, traffic disruptions from bridge construction affecting the Lincoln property, and increased promotional activity and marketing team turnover in Atlantic City Casinos & Resorts Q2 2024 Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $343.1M | $333.2M | +3.0% | | Adjusted EBITDAR | $99.8M | $111.0M | -10.1% | - The Chicago Temporary Casino continues to gain traction, having welcomed over one million visitors[5] - Performance was negatively impacted by the Tropicana closure, traffic disruptions in Rhode Island due to bridge construction, and challenges in Atlantic City[5] International Interactive International Interactive revenue fell 7.4% year-over-year to $229.4 million, driven by logistical and operational hurdles in the Asian market, partly mitigated by a strong 9% revenue growth in the UK, and despite lower revenue, segment adjusted EBITDAR margins improved by 130 basis points, resulting in a smaller 3.9% year-over-year decline in adjusted EBITDAR to $81.3 million International Interactive Q2 2024 Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $229.4M | $247.8M | -7.4% | | Adjusted EBITDAR | $81.3M | $84.6M | -3.9% | - UK revenue grew a healthy 9% (8% in constant currency), reflecting iGaming market share gains and the initial results from a new online sports betting offering[6] - The business in Asia was challenged during the quarter due to logistical and operational hurdles that directly impacted players[6] North America Interactive The North America Interactive segment delivered exceptional growth, with revenue surging 94.7% year-over-year to $49.2 million, and its Adjusted EBITDAR loss significantly narrowed to $6.8 million from a loss of $17.7 million in the prior year, driven by strong iGaming operations in Rhode Island, New Jersey, and Pennsylvania, and positive player feedback from the integration of Kambi and White Hat technology platforms North America Interactive Q2 2024 Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $49.2M | $25.3M | +94.7% | | Adjusted EBITDAR | ($6.8M) | ($17.7M) | +61.8% | - The segment outperformed internal expectations, benefiting from strong iGaming performance in Rhode Island, New Jersey, and Pennsylvania[7] - The ongoing integration of Kambi and White Hat technology platforms has enhanced the product offering and received positive player feedback[7] 2024 Guidance Financial Outlook and Capital Expenditures Bally's expects its full-year 2024 results to be at the lower end of its guidance range of $2.5-$2.7 billion for revenue and $655-$695 million for adjusted EBITDAR, leading the company to tighten capital allocation by reducing its 2024 core portfolio capital expenditure and software development cost targets by approximately $50 million to an expected $115 million, excluding funding for major development projects like the Tropicana and Chicago casino which are covered by separate agreements with GLPI 2024 Full-Year Guidance | Metric | Guidance Range | | :--- | :--- | | Revenue | $2.5B - $2.7B | | Adjusted EBITDAR | $655M - $695M | - The company currently expects to be at the lower end of the guidance range for the year[9] - Capital expenditure and software development cost targets for the core portfolio are reduced by approximately $50 million to an expected $115 million for 2024[10] - Developmental CapEx for the Tropicana demolition and Chicago casino construction is not included in the $115 million target and will be largely funded by GLPI[10] Financial Statements & Reconciliations Condensed Consolidated Statements of Operations For the second quarter ended June 30, 2024, Bally's reported total revenues of $621.7 million, up from $606.2 million in Q2 2023, with operating income slightly down at $5.6 million from $6.0 million in the prior-year quarter, and a wider net loss of $60.2 million, or ($1.24) per diluted share, compared to $25.7 million, or ($0.48) per share, in Q2 2023 Q2 2024 Statement of Operations (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenue | $621,657 | $606,206 | | Income from Operations | $5,573 | $5,982 | | Net Loss | ($60,196) | ($25,651) | | Diluted Loss Per Share | ($1.24) | ($0.48) | Reconciliation of GAAP to Non-GAAP Measures The company reconciled its Q2 2024 GAAP net loss of $60.2 million to a non-GAAP Adjusted EBITDA of $130.1 million, which was nearly flat compared to the prior year, and after adding back $31.7 million in rent expenses associated with triple net operating leases, the Adjusted EBITDAR for the quarter was $161.8 million, with significant adjustments including interest expense, depreciation, transaction costs, and Tropicana demolition costs Q2 2024 Reconciliation of Net Loss to Adjusted EBITDAR (in thousands) | Metric | Three Months Ended June 30, 2024 | | :--- | :--- | | Net Loss | ($60,196) | | Interest expense, net | $74,200 | | Depreciation and amortization | $78,782 | | Transaction costs | $11,119 | | Tropicana Las Vegas demolition costs | $12,261 | | Adjusted EBITDA | $130,062 | | Rent expense associated with triple net leases | $31,737 | | Adjusted EBITDAR | $161,799 | Segment Financial Data This table details the revenue and Adjusted EBITDAR contributions from each of Bally's operating segments for the second quarter and first half of 2024, showing Casinos & Resorts as the largest contributor to both revenue ($343.1M) and Adjusted EBITDAR ($99.8M) for Q2, followed by International Interactive, while the North America Interactive segment demonstrated strong revenue growth despite operating at an Adjusted EBITDAR loss Q2 2024 Revenue and Adjusted EBITDAR by Segment (in thousands) | Segment | Revenue | Adjusted EBITDAR | | :--- | :--- | :--- | | Casinos & Resorts | $343,051 | $99,801 | | International Interactive | $229,396 | $81,292 | | North America Interactive | $49,210 | ($6,757) | | Other | N/A | ($12,537) | | Total | $621,657 | $161,799 | Selected Balance Sheet and Cash Flow Data As of June 30, 2024, Bally's reported $154.7 million in cash and cash equivalents and $3.67 billion in total long-term debt, with capital expenditures of $35.7 million and cash paid for capitalized software of $10.6 million for the second quarter of 2024 Balance Sheet Data (in thousands) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $154,733 | $163,194 | | Long-term debt, including current portion | $3,673,131 | $3,662,635 | Cash Flow Data (in thousands) | Metric | Three Months Ended June 30, 2024 | | :--- | :--- | | Capital expenditures | $35,709 | | Cash paid for capitalized software | $10,626 | Other Information About Bally's Corporation Bally's Corporation is a global casino-entertainment company that currently owns and manages 15 casinos across 10 states, along with a golf course, a horse racetrack, and Bally's Interactive International, employing approximately 10,600 individuals and operating 15,300 slot machines, 580 table games, and 3,800 hotel rooms - Bally's currently owns and manages 15 casinos in 10 states, with plans to expand to 16 casinos in 11 states upon completion of projects in Chicago, IL, and State College, PA[17][18] Conference Call Information The company held its second quarter 2024 earnings conference call and webcast on July 31, 2024, at 4:30 p.m. EDT, with a webcast archive available on the Investors section of the company's website Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements that involve risks and uncertainties, which are not guarantees of future performance, and actual results may differ materially, with the company not intending to update any forward-looking statements