Bally's (BALY) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements reflecting the merger with Queen Casino & Entertainment, Inc Condensed Consolidated Balance Sheets The balance sheet reflects significant growth in assets, liabilities, and equity following the merger with Queen Financial Metric Comparison | Financial Metric | June 30, 2025 (Successor) | December 31, 2024 (Predecessor) | | :--- | :--- | :--- | | Total Current Assets | $489,977 thousand | $447,873 thousand | | Total Assets | $7,794,257 thousand | $5,860,137 thousand | | Total Current Liabilities | $993,911 thousand | $677,808 thousand | | Total Liabilities | $7,151,818 thousand | $5,829,235 thousand | | Total Stockholders' Equity | $642,439 thousand | $30,902 thousand | Condensed Consolidated Statements of Operations The company reported higher revenue but a significantly larger net loss for Q2 2025 compared to the prior year, driven by a large tax provision Quarterly Operational Performance | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 (Successor) | Three Months Ended June 30, 2024 (Predecessor) | | :--- | :--- | :--- | | Total Revenue | $657,534 | $621,657 | | (Loss) income from operations | $(2,437) | $5,573 | | Net loss | $(228,436) | $(60,196) | | Basic loss per share | $(3.76) | $(1.24) | | Diluted loss per share | $(3.76) | $(1.24) | Condensed Consolidated Statements of Cash Flows Cash flow analysis shows significant use of cash in operations and investing, funded by financing activities Cash Flow Activity Summary | Cash Flow Activity (in thousands) | Period from Feb 8 to Jun 30, 2025 (Successor) | Period from Jan 1 to Feb 7, 2025 (Predecessor) | Six Months Ended Jun 30, 2024 (Predecessor) | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $58,799 | $(80,186) | $39,699 | | Net cash used in investing activities | $(163,552) | $(17,697) | $(87,602) | | Net cash provided by financing activities | $119,695 | $97,988 | $59,802 | Notes to Condensed Consolidated Financial Statements The notes detail the accounting for the Queen merger, segment performance, and the subsequent sale of the International Interactive business - On February 7, 2025, the company completed its merger with The Queen Casino & Entertainment, Inc, accounted for as a merger between entities under common control[34][41] - Subsequent to the quarter end, the company agreed to sell its International Interactive business to Intralot S.A. for approximately €2.7 billion[203] - The company has significant capital expenditure commitments, including approximately $965.7 million remaining for the Bally's Chicago resort and $42.0 million for its Rhode Island properties[178][179] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, liquidity, and capital projects, focusing on the Queen merger and the planned Intralot sale - Total revenue for Q2 2025 increased 6% year-over-year to $657.5 million, driven by a 14.7% increase in the Casinos & Resorts segment from the Queen acquisition[241] - The company will use proceeds from the €2.7 billion sale of its International Interactive business to pay down secured debt and enhance liquidity[222] - Major capital projects, including Bally's Chicago, are advancing, with future funding expected through an agreement with Gaming and Leisure Properties, Inc (GLPI)[295] Results of Operations Q2 2025 revenue grew due to the Casinos & Resorts segment, while net loss widened significantly due to a large income tax provision Q2 2025 vs Q2 2024 Performance | Metric (in millions) | Q2 2025 (Successor) | Q2 2024 (Predecessor) | | :--- | :--- | :--- | | Total Revenue | $657.5 | $621.7 | | (Loss) from operations | $(2.4) | $5.6 | | Net loss | $(228.4) | $(60.2) | - Segment Revenue Performance (Q2 2025 vs Q2 2024): * Casinos & Resorts: Revenue increased by 14.7% ($50.3 million), mainly due to the contribution from the Queen acquisition * International Interactive: Revenue decreased by 10.2% ($23.3 million), primarily due to the sale of the Asia business in late 2024 * North America Interactive: Revenue increased by 21.5% ($10.0 million), driven by iGaming expansion and optimized marketing[241] Liquidity and Capital Resources The company's liquidity is supported by its credit facility and new debt, funding capital expenditures and investments Six-Month Cash Flow Summary | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 (Combined) | Six Months Ended June 30, 2024 (Predecessor) | | :--- | :--- | :--- | | Net cash from operating activities | $(21,387) | $39,699 | | Net cash used in investing activities | $(181,249) | $(87,602) | | Net cash provided by financing activities | $217,683 | $59,802 | - In connection with the Queen merger, the company issued $500 million in 11.00% Senior Secured Notes due 2028[144][279] - The company has significant capital commitments, with $965.7 million remaining for the Bally's Chicago project and $42.0 million for Bally's Twin River[294][295][297] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate fluctuations on its variable-rate debt and foreign currency exposure from UK operations - The company is exposed to interest rate risk with $2.13 billion of variable rate debt outstanding; a hypothetical 1% rate increase would raise annual interest expense by approximately $21.3 million[302] - The company faces foreign currency risk from its UK operations, where revenues are primarily in British Pound Sterling (GBP), and uses derivatives to manage this exposure[305] Item 4. Controls and Procedures Disclosure controls were deemed ineffective due to a material weakness in the International Interactive segment, with remediation underway - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[306] - The ineffectiveness is due to a material weakness in the International Interactive segment concerning a lack of segregation of duties over journal entries[307] - Remediation efforts are underway, including the implementation of a new ERP system in Q1 2025 to enforce proper segregation of duties[310] PART II - OTHER INFORMATION Item 1. Legal Proceedings Ongoing legal proceedings from the ordinary course of business are not expected to have a material adverse effect on the company's financials - The company is party to various legal proceedings but does not expect them to have a material impact on its financial statements[314] Item 1A. Risk Factors No material changes to risk factors were reported since the company's latest Annual Report on Form 10-K - No material changes to the company's risk factors were reported since the last Annual Report on Form 10-K[315] Item 5. Other Information No officers or directors adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the three months ended June 30, 2025[316] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including key agreements and required certifications