Bally's (US:BALY)2020-11-06 21:16Acquisitions - The company completed the acquisition of Casino KC and Casino Vicksburg for an aggregate purchase price of $229.9 million in cash on July 1, 2020[150]. - The acquisition of Black Hawk Casinos was completed for $53.8 million in cash, which included three properties and sports betting licenses following the legalization of sports gambling in Colorado[149]. - The company expects to close the acquisition of Eldorado Shreveport and MontBleu for a total of $155.0 million in the first half of 2021, pending regulatory approvals[151]. - The company has entered into an agreement to acquire Jumer's Casino & Hotel for $120.0 million, expected to close in the second quarter of 2021[153]. - The acquisition of Tropicana Evansville Casino operations is set for $140.0 million, with an expected closing in mid-2021[154]. - The company acquired the Bally's brand name from Caesars Entertainment, changing its corporate name to Bally's Corporation effective November 9, 2020[157]. - The company anticipates that the pending acquisitions will expand its operations to 15 properties across ten states, diversifying its financial footprint[156]. - The acquisition of Casino KC and Casino Vicksburg contributed $19.0 million in revenue since July 1, 2020[182]. - Revenue from the acquisition of Black Hawk Casinos contributed $5.7 million and $11.2 million for the three and nine months ended September 30, 2020, respectively[189]. - Revenue from the acquisition of Casino KC and Casino Vicksburg contributed $19.0 million to revenue for the three and nine months ended September 30, 2020[189]. - The company incurred acquisition costs of $0.2 million and $0.5 million related to the acquisitions of Black Hawk Casinos and Casino KC, respectively, during the three months ended September 30, 2020[193]. - An impairment charge of $8.6 million was recorded for the nine months ended September 30, 2020, related to goodwill and intangible assets from the Black Hawk Casinos acquisition[194]. Financial Performance - Revenue for Q3 2020 was $116.6 million, a decrease of 9.9% from $129.3 million in Q3 2019[181]. - Income from operations for Q3 2020 was $23.4 million, compared to $21.5 million in Q3 2019, reflecting an increase of 8.8%[181]. - For the first nine months of 2020, revenue was $254.7 million, down 35.3% from $393.2 million in the same period last year[181]. - The company reported a loss from operations of $0.7 million for the first nine months of 2020, compared to income of $85.6 million in the same period last year[181]. - Operating margin improved to 20.05% in Q3 2020 from 16.59% in Q3 2019, due to operational efficiencies[182]. - Interest expense increased to $17.0 million in Q3 2020, up from $11.5 million in Q3 2019[182]. - The company recognized goodwill and intangible asset impairment charges of $5.3 million in Q3 2020[182]. - Tax benefit for Q3 2020 was $0.2 million, compared to a tax expense of $3.8 million in Q3 2019[182]. - Non-gaming revenue includes hotel, food and beverage, and other revenue, which are critical for overall performance evaluation[186]. - Total revenue for the nine months ended September 30, 2020 decreased 35.2%, or $138.5 million, to $254.7 million from $393.2 million in the same period last year[189]. - Net income for the three months ended September 30, 2020, was $6.7 million, a decrease of 3.9% from $7.0 million in the same period last year[200]. - Consolidated Adjusted EBITDA was $38.0 million for the three months ended September 30, 2020, an increase of 6.8% from $35.6 million in the same period last year[201]. - Adjusted EBITDA for the nine months ended September 30, 2020, was $49.3 million, down 61.1% from $126.9 million in the same period last year[202]. - Net income for the nine months ended September 30, 2020, was a loss of $25.7 million, compared to a net income of $41.8 million for the same period in 2019[210]. COVID-19 Impact - The company reported a significant impact from COVID-19, with properties temporarily closed by March 16, 2020, and reopening at limited capacities ranging from 30% to 65%[165]. - The company anticipates that revenues for the three months ending December 31, 2020 will continue to be materially and negatively impacted by ongoing restrictions due to COVID-19[189]. - The company reported a $67.5 million decrease in net income attributed to the COVID-19 pandemic and related operational restrictions[214]. - The COVID-19 pandemic has caused significant disruptions, impacting the Company's financial condition and operations, with ongoing monitoring of the situation[230]. Capital Expenditures and Financing - The company has suspended all major capital projects and reduced expected capital expenditures for the remainder of 2020[170]. - Capital expenditures for the nine months ended September 30, 2020, were $8.6 million, significantly down from $23.2 million in the same period last year due to COVID-19[229]. - The Company borrowed $250.0 million under the Revolving Credit Facility to enhance liquidity amid COVID-19 uncertainties, later repaying this amount after securing a $275 million term loan[220]. - The Company amended its Credit Facility to provide financial covenant relief, allowing a minimum liquidity requirement of $75.0 million at the end of April and May 2020, decreasing to $50.0 million by March 2021[221]. - The Company is prohibited from declaring dividends or making restricted payments during the Leverage Ratio Covenant Relief Period, with interest rates on the Revolving Credit Facility set at LIBOR + 2.75%[222]. - The Company increased its Term Loan Facility by $275 million, with borrowings bearing interest at LIBOR + 8.00% and a 1.00% LIBOR floor until May 2026[223]. - The Company issued $525.0 million in aggregate principal amount of 6.75% Senior Notes due June 1, 2027, with interest paid semi-annually[224]. Employee and Operational Adjustments - Employee costs have been reduced through measured re-hiring and the suspension of employer 401(k) matching contributions[170]. - The company has established a fund to provide financial assistance to employees facing severe hardship during the shutdown[171]. - Share-based compensation increased by $6.7 million primarily due to the annual grant of restricted stock awards in the first quarter of 2020[214]. Future Plans and Strategy - The company aims to become the industry leader in regional gaming, mobile, and iGaming segments, targeting over 80 million customers across ten states with 14 premier casino properties[159]. - The customer database is expected to grow to approximately 14 million, reflecting the company's disciplined growth strategy[159]. - The Company plans to invest approximately $40 million in the Casino KC redevelopment project, expected to enhance property value and guest experience, primarily in 2021[229]. - Following the acquisition of Bally's Atlantic City, the Company intends to invest about $90 million over five years for facility upgrades and amenity expansions[229]. Accounting and Compliance - The main key performance indicator is Adjusted EBITDA, which excludes various expenses and is used to manage the business effectively[178]. - The company is authorized to establish Adjusted EBITDA amounts based on pre-COVID performance levels for compliance with leverage ratio calculations[164]. - The CARES Act provides potential benefits, including a refundable federal tax credit for employee retention and deferral of employer FICA taxes[176]. - The Company will adopt new accounting standards as required for public companies, having elected not to take advantage of the JOBS Act's extended transition period[231].