Bally's (US:BALY)2022-05-04 16:00PART I - Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2022, detailing balance sheets, operations, equity, cash flows, and notes on accounting policies and acquisitions Condensed Consolidated Balance Sheets As of March 31, 2022, total assets were $6.41 billion, liabilities $4.86 billion, and stockholders' equity $1.55 billion, reflecting slight decreases from year-end 2021 Condensed Consolidated Balance Sheets ($ thousands) | Metric | March 31, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Total Assets | $6,408,028 | $6,553,217 | | Goodwill | $2,082,632 | $2,122,653 | | Intangible assets, net | $2,397,827 | $2,477,952 | | Total Liabilities | $4,856,805 | $4,937,415 | | Long-term debt, net | $3,449,053 | $3,426,777 | | Total Stockholders' Equity | $1,551,223 | $1,615,802 | Condensed Consolidated Statements of Operations Q1 2022 revenue significantly increased to $548.3 million, resulting in a net income of $1.9 million ($0.03 per diluted share), a turnaround from a prior-year net loss Condensed Consolidated Statements of Operations ($ thousands) | Metric | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Total Revenue | $548,271 | $192,266 | | Gaming Revenue | $463,702 | $155,278 | | Income from Operations | $22,520 | $29,474 | | Net Income (Loss) | $1,889 | ($10,705) | | Diluted Earnings (Loss) Per Share | $0.03 | ($0.30) | Condensed Consolidated Statements of Cash Flows Q1 2022 saw net cash from operations at $20.8 million, a decrease from prior year, while cash used in investing activities increased to $72.0 million, and financing activities provided $4.4 million Condensed Consolidated Statements of Cash Flows ($ thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 ($ thousands) | Three Months Ended March 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $20,810 | $25,870 | | Net cash used in investing activities | ($71,955) | ($28,884) | | Net cash provided by financing activities | $4,405 | $31,861 | | Net change in cash | ($51,170) | $28,916 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, segment realignment, the Gamesys acquisition's impact, and specifics on $2.08 billion goodwill, $2.40 billion intangible assets, and $3.47 billion long-term debt - The company realigned its business into three reportable segments: Casinos & Resorts, North America Interactive, and International Interactive, to better reflect its strategic growth and recent acquisitions194195 Revenue by Segment (Q1 2022) ($ thousands) | Revenue by Segment (Q1 2022) | Amount ($ thousands) | | :--- | :--- | | Casinos & Resorts | $279,970 | | North America Interactive | $15,227 | | International Interactive | $253,074 | | Total Revenue | $548,271 | - The acquisition of Gamesys on October 1, 2021, for $2.60 billion was a major event, adding $1.68 billion in goodwill and significantly expanding the company's international interactive operations101102 - Total long-term debt as of March 31, 2022, was approximately $3.47 billion, composed of a Term Loan Facility, a Revolving Credit Facility, and two series of Senior Notes148 - The company has a pending acquisition of the Tropicana Las Vegas Hotel and Casino, valued at approximately $300 million, expected to close in 2022106 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses 185.2% revenue growth to $548.3 million in Q1 2022, driven by acquisitions and easing restrictions, outlining strategy to expand interactive business and reinvest in casinos, with sufficient liquidity for operations and capital projects - The company's strategy is to become a leading, full-service, vertically integrated sports betting and iGaming company by leveraging acquisitions like Gamesys and its media partnership with Sinclair214215217 - Total revenue for Q1 2022 increased by 185.2% to $548.3 million, with acquisitions completed after Q1 2021, including Gamesys, contributing an aggregate of $331.3 million to this revenue239240 Segment Adjusted EBITDA ($M) | Segment | Q1 2022 Adj. EBITDA ($M) | Q1 2021 Adj. EBITDA ($M) | | :--- | :--- | :--- | | Casinos & Resorts | $73.8 | $58.2 | | North America Interactive | $(19.3) | $1.4 | | International Interactive | $73.3 | - | | Consolidated Total | $115.0 | $52.5 | - The company plans significant capital expenditures in 2022, including projects at Bally's Twin River ($50 million), Bally's Atlantic City ($40 million), and Bally's Kansas City ($50 million), to be funded by cash flow and cash on hand272273 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are interest rate risk from $2.05 billion variable-rate debt and foreign currency risk from UK operations, with no current use of derivative hedges - As of March 31, 2022, the company had $2.05 billion of variable-rate debt, where a hypothetical 1% increase in the effective interest rate would increase annual interest expense by approximately $19.5 million279 - The company is exposed to foreign currency risk, primarily from its UK operations conducted in GBP, and has not historically used hedges to manage this exposure281 Controls and Procedures Management, including CEO and CFO, deemed disclosure controls and procedures effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2022282 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls283 PART II - Other Information Legal Proceedings The company is involved in various legal proceedings arising from normal business, with management expecting no material impact on financial condition or results of operations - The company is party to various legal proceedings from its normal course of business, but estimated losses are not expected to be material285 Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, have been reported - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021286 Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2022, the company repurchased 350,616 shares for $13.3 million, with $334.6 million remaining available under the Capital Return Program as of March 31, 2022 Share Repurchase Activity ($ thousands) | Period | Total Shares Purchased | Average Price Paid per Share | Total Cost ($ thousands) | | :--- | :--- | :--- | :--- | | Jan 1 - Jan 31, 2022 | 350,616 | $37.90 | $13,288 | | Feb 1 - Feb 28, 2022 | 0 | N/A | $0 | | Mar 1 - Mar 31, 2022 | 0 | N/A | $0 | - As of March 31, 2022, approximately $334.6 million remained available for repurchases under the company's Capital Return Program289 Exhibits This section provides an index of exhibits filed with the Form 10-Q, including an amended regulatory agreement with Rhode Island and employment agreements for key executives - The filing includes several key exhibits, such as an Amended and Restated Regulatory Agreement with the State of Rhode Island, and employment agreements for the CEO and CFO291