Bally's (BALY) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Presents Bally's unaudited condensed consolidated financial statements and management's discussion and analysis ITEM 1. Financial Statements Presents Bally's unaudited condensed consolidated financial statements and detailed notes for Q2 2022 and 2021 Condensed Consolidated Balance Sheets (unaudited) Presents Bally's unaudited condensed consolidated balance sheets as of June 30, 2022, and December 31, 2021 Condensed Consolidated Balance Sheets (Unaudited) | (In thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $176,158 | $206,193 | | Total current assets | $452,935 | $567,187 | | Total assets | $6,235,993 | $6,553,217 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $505,079 | $570,132 | | Long-term debt, net | $3,336,617 | $3,426,777 | | Total liabilities | $4,818,068 | $4,937,415 | | Total stockholders' equity | $1,417,925 | $1,615,802 | | Total liabilities and stockholders' equity | $6,235,993 | $6,553,217 | - Total assets decreased by approximately $317.2 million from December 31, 2021, to June 30, 2022, primarily driven by reductions in goodwill and intangible assets[4] - Total liabilities decreased by approximately $119.3 million, while total stockholders' equity decreased by approximately $197.9 million over the same period[4] Condensed Consolidated Statements of Operations (unaudited) Presents Bally's unaudited condensed consolidated statements of operations for Q2 2022 and 2021 Condensed Consolidated Statements of Operations (Unaudited) | (In thousands, except per share data) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $552,496 | $267,733 | $1,100,767 | $459,999 | | Income from operations | $85,319 | $80,532 | $107,839 | $110,006 | | Net income | $59,501 | $68,942 | $61,390 | $58,237 | | Basic earnings per share | $0.98 | $1.43 | $1.02 | $1.39 | | Diluted earnings per share | $0.98 | $1.40 | $1.02 | $1.37 | - Total revenue for the three months ended June 30, 2022, increased by 106.4% year-over-year, reaching $552.5 million, primarily driven by recent acquisitions and reduced COVID-19 restrictions[7][250] - Net income for the three months ended June 30, 2022, decreased by 13.7% to $59.5 million, while diluted EPS decreased to $0.98 from $1.40 in the prior year, despite revenue growth[7][261] Condensed Consolidated Statements of Comprehensive Loss (unaudited) Presents Bally's unaudited condensed consolidated statements of comprehensive loss for Q2 2022 and 2021 Condensed Consolidated Statements of Comprehensive Loss (Unaudited) | (In thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income | $59,501 | $68,942 | $61,390 | $58,237 | | Foreign currency translation adjustment | $(198,813) | $419 | $(270,355) | $(633) | | Total comprehensive (loss) income | $(139,312) | $69,402 | $(208,965) | $57,685 | - The company reported a significant foreign currency translation adjustment loss of $(198.8) million for the three months and $(270.4) million for the six months ended June 30, 2022, leading to a total comprehensive loss[10] Condensed Consolidated Statements of Stockholdings' Equity (unaudited) Presents Bally's unaudited condensed consolidated statements of stockholders' equity for the six months ended June 30, 2022 - Total stockholders' equity decreased from $1,615.8 million as of December 31, 2021, to $1,417.9 million as of June 30, 2022, primarily due to accumulated other comprehensive loss[13] - Key changes in equity during the six months ended June 30, 2022, included a net income of $61.4 million, share-based compensation of $11.4 million, and a significant other comprehensive loss of $(270.4) million[13][10] - The company repurchased 350,616 common shares for $13.3 million during the six months ended June 30, 2022[13][188] Condensed Consolidated Statements of Cash Flows (unaudited) Presents Bally's unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 Condensed Consolidated Statements of Cash Flows (Unaudited) | (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $164,544 | $34,225 | | Net cash used in investing activities | $(55,834) | $(235,727) | | Net cash (used in) provided by financing activities | $(140,790) | $948,147 | | Net change in cash and cash equivalents and restricted cash | $(43,484) | $747,128 | | Cash and cash equivalents and restricted cash, end of period | $231,356 | $873,683 | - Net cash provided by operating activities significantly increased to $164.5 million for the six months ended June 30, 2022, from $34.2 million in the prior year, primarily due to higher depreciation and amortization[18][273] - Net cash used in investing activities decreased by $179.9 million, from $235.7 million in 2021 to $55.8 million in 2022, mainly due to a reduction in cash paid for acquisitions, partially offset by increased capital expenditures and gaming license acquisitions[18][275] - Net cash used in financing activities was $140.8 million for the six months ended June 30, 2022, a significant shift from $948.1 million provided in the prior year, driven by 2021 equity issuances and increased debt repayments[18][276] Notes to Condensed Consolidated Financial Statements (unaudited) Provides detailed notes on accounting policies, acquisitions, debt, leases, and segment performance 1. GENERAL INFORMATION Overview of Bally's business, financial statement preparation, and current operational context - Bally's Corporation is a global gaming, hospitality, and entertainment company with casinos, resorts, and online gaming (iGaming) B2B2C businesses, including 14 casino and resort properties and various interactive businesses[21][22][23] - The company's financial statements are prepared in accordance with SEC rules for interim financial information, with certain prior year amounts reclassified for consistent presentation[25][26] - A prior year cash flow classification error of $144.0 million from sale-leaseback proceeds was corrected, reclassifying it from financing to investing activities[27] - As of June 30, 2022, all company properties are operating with minimal COVID-19 restrictions, though future developments could still negatively impact operations[28] 2. SIGNIFICANT ACCOUNTING POLICIES Details the company's significant accounting policies, including cash, receivables, advertising, VIEs, and tax rates Cash and Restricted Cash Reconciliation | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $176,158 | $206,193 | | Restricted cash | $55,198 | $68,647 | | Total cash and cash equivalents and restricted cash | $231,356 | $274,840 | Accounts Receivable, Net | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Accounts receivable | $63,324 | $52,632 | | Less: Allowance for doubtful accounts | $(5,615) | $(4,454) | | Accounts receivable, net | $57,709 | $48,178 | - Advertising expense significantly increased to $52.1 million for Q2 2022 (from $1.7 million in Q2 2021) and $117.4 million for YTD 2022 (from $3.0 million in YTD 2021), with interactive business advertising accounting for $49.7 million and $112.7 million, respectively[37] - The company consolidates Breckenridge Curacao B.V. as a Variable Interest Entity (VIE), holding $73.1 million in assets and $72.4 million in liabilities as of June 30, 2022[48] - The effective tax rate for Q2 2022 was 8.4% (vs 28.1% in Q2 2021) and (0.2)% for YTD 2022 (vs 27.6% in YTD 2021), largely due to foreign tax benefits and discrete tax items related to sale-leaseback transactions[53][54] 3. RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS Discusses the impact of recently adopted and issued accounting pronouncements - The company is evaluating the impact of ASU No. 2021-08, 'Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,' effective for fiscal years beginning after December 15, 2022[56] 4. REVENUE RECOGNITION Explains the company's revenue recognition policies across gaming, hotel, food and beverage, and entertainment segments - Revenue is generated from gaming (retail, online, sports betting, racing), hotel, food and beverage, and retail entertainment and other, recognized when performance obligations are satisfied[59][60] Total Revenue by Segment | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Casinos & Resorts | $299,875 | $262,188 | $579,845 | $451,621 | | North America Interactive | $18,050 | $5,545 | $33,277 | $8,378 | | International Interactive | $234,571 | $0 | $487,645 | $0 | | Total revenue | $552,496 | $267,733 | $1,100,767 | $459,999 | - International Interactive segment, primarily Gamesys' European and Asian operations, contributed $234.6 million in revenue for Q2 2022 and $487.6 million for YTD 2022, following its acquisition in October 2021[81] Contract Liabilities | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Loyalty programs | $19,612 | $19,099 | | Advanced deposits from customers | $28,156 | $36,068 | | Unpaid wagers | $11,204 | $11,440 | | Total | $58,972 | $66,607 | 5. ACQUISITIONS Details the company's recent acquisitions, including various interactive businesses and Gamesys - The company completed several acquisitions in 2021, including Bally's Lake Tahoe, Bally's Evansville, Bally's Quad Cities, and various North America Interactive businesses (SportCaller, MKF, Bally's Interactive, AVP, Telescope, Degree 53), and Gamesys[86][87][90][94][98][99][100][101][102][105] - Bally's Evansville acquisition resulted in a bargain purchase gain of $20.9 million, attributed to a distressed sale prior to Eldorado's merger with Caesars and the timing during COVID-19 shutdowns[93] - The Gamesys acquisition on October 1, 2021, for $2.60 billion (cash and stock), significantly expanded the company's international interactive footprint, adding $1.68 billion in goodwill[105][106] - The company expects to complete the acquisition of Tropicana Las Vegas in 2022 for approximately $300 million, including a $150 million purchase price for non-land assets and a 50-year land lease[110] 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS Provides a breakdown of prepaid expenses and other current assets Prepaid Expenses and Other Current Assets | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Services and license agreements | $24,357 | $21,496 | | Due from payment service providers | $21,425 | $15,984 | | Sales tax | $9,124 | $18,308 | | Deposits | $8,028 | $8,748 | | Prepaid marketing | $5,844 | $10,066 | | Convertible loans | $5,205 | $0 | | Purse funds | $4,921 | $8,286 | | Unbilled revenue | $3,004 | $7,759 | | Prepaid insurance | $2,043 | $9,637 | | Other | $5,421 | $4,179 | | Total prepaid expenses and other current assets | $89,372 | $104,463 | 7. PROPERTY AND EQUIPMENT Presents net property and equipment values and associated depreciation expenses Property and Equipment, Net | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total property, plant and equipment | $1,051,116 | $1,043,848 | | Less: Accumulated depreciation | $(230,662) | $(205,197) | | Property and equipment, net | $820,454 | $838,651 | - Depreciation expense for property and equipment was $16.1 million for Q2 2022 (up from $12.8 million in Q2 2021) and $32.9 million for YTD 2022 (up from $23.9 million in YTD 2021)[120] 8. GOODWILL AND INTANGIBLE ASSETS Details goodwill by segment and amortizable/unamortizable intangible assets, including amortization Goodwill by Reportable Segment (Six Months Ended June 30, 2022) | (in thousands) | Casinos & Resorts | North America Interactive | International Interactive | Total | | :--- | :--- | :--- | :--- | :--- | | Goodwill as of December 31, 2021 | $201,952 | $283,358 | $1,637,343 | $2,122,653 | | Effect of foreign exchange | $0 | $(1,223) | $(149,784) | $(151,007) | | Purchase accounting adjustments | $(1,285) | $239 | $(542) | $(1,588) | | Goodwill as of June 30, 2022 | $200,667 | $282,374 | $1,487,017 | $1,970,058 | - Total goodwill decreased by $152.6 million to $1,970.1 million as of June 30, 2022, primarily due to a foreign exchange effect of $(149.8) million in the International Interactive segment[123] Intangible Assets, Net (June 30, 2022) | (in thousands, except years) | Weighted average remaining life (in years) | Gross Carrying Amount | Accumulated Amortization | Net | | :--- | :--- | :--- | :--- | :--- | | Amortizable intangible assets: | | | | | | Naming rights - Sinclair | 8.7 | $330,988 | $(42,497) | $288,491 | | Customer relationships | 6.2 | $941,010 | $(111,275) | $829,735 | | Developed technology | 6.7 | $366,997 | $(43,780) | $323,217 | | Total amortizable intangible assets | | $1,760,182 | $(225,213) | $1,534,969 | | Intangible assets not subject to amortization: | | | | | | Gaming licenses | Indefinite | $528,871 | $0 | $528,871 | | Trade names | Indefinite | $245,053 | $0 | $245,053 | | Total unamortizable intangible assets | | $775,280 | $0 | $775,280 | | Total intangible assets, net | | $2,535,462 | $(225,213) | $2,310,249 | - Amortization of intangible assets was $58.7 million for Q2 2022 (up from $13.0 million in Q2 2021) and $120.8 million for YTD 2022 (up from $14.7 million in YTD 2021)[126] 9. FAIR VALUE MEASUREMENTS Discusses fair value measurements of Level 3 assets and liabilities, including warrants and contingent consideration Fair Value of Level 3 Assets and Liabilities (June 30, 2022) | (in thousands) | Sinclair Performance Warrants | Contingent Consideration | Convertible Loans | Total | | :--- | :--- | :--- | :--- | :--- | | Beginning as of December 31, 2021 | $69,564 | $34,931 | $2,025 | $106,520 | | Additions in the period | $0 | $0 | $667 | $667 | | Reductions in the period | $0 | $(15,862) | $0 | $(15,862) | | Change in fair value | $(33,411) | $(10,368) | $(206) | $(43,985) | | Ending as of June 30, 2022 | $36,153 | $8,701 | $2,486 | $47,340 | - Sinclair Performance Warrants, classified as Level 3 derivative liabilities, decreased in fair value by $33.4 million for the six months ended June 30, 2022, due to management's assumptions on performance milestones[132][136] - Contingent consideration related to SportCaller and MKF acquisitions, also Level 3, decreased by $10.4 million in fair value and had $15.9 million in reductions due to settlements during the period[132][138] 10. ACCRUED LIABILITIES Provides a breakdown of accrued liabilities, including gaming liabilities, compensation, and interest payable Accrued Liabilities | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Gaming liabilities | $156,800 | $170,508 | | Compensation | $49,935 | $49,764 | | Interest payable | $35,196 | $46,292 | | Other | $100,755 | $134,864 | | Total accrued liabilities | $342,686 | $401,428 | - Total accrued liabilities decreased by $58.7 million from December 31, 2021, to June 30, 2022, primarily due to reductions in gaming liabilities and other accrued amounts[146] 11. ACQUISITION, INTEGRATION AND RESTRUCTURING Details expenses related to acquisition, integration, and restructuring activities Acquisition, Integration and Restructuring Expenses | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Acquisition and integration costs | $8,476 | $18,402 | $12,958 | $30,660 | | Restructuring expense | $1,636 | $0 | $2,434 | $0 | | Total acquisition, integration and restructuring | $10,112 | $18,402 | $15,392 | $30,660 | - Acquisition and integration costs decreased significantly in 2022 compared to 2021, mainly due to lower costs associated with the Gamesys acquisition in the prior year[148][255] - Restructuring expense of $1.6 million for Q2 2022 and $2.4 million for YTD 2022 was incurred due to severance costs, with no such expense in the prior year[148][149] 12. LONG-TERM DEBT Outlines the company's long-term debt structure, including term loan facilities and senior notes Long-Term Debt | (in thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Term Loan Facility | $1,935,275 | $1,945,000 | | Revolving Credit Facility | $0 | $85,000 | | 5.625% Senior Notes due 2029 | $750,000 | $750,000 | | 5.875% Senior Notes due 2031 | $750,000 | $750,000 | | Long-term debt, net of discount and deferred financing fees; excluding current portion | $3,336,617 | $3,426,777 | - The company's long-term debt includes $1.5 billion in Senior Notes (5.625% due 2029 and 5.875% due 2031) and a $1.945 billion Term Loan Facility maturing in 2028[155][156][159] - The Revolving Credit Facility, with a principal amount of $620.0 million maturing in 2026, had no outstanding borrowings as of June 30, 2022[159][154] 13. LEASES Discusses the company's lease arrangements, including sale-leaseback transactions and operating lease liabilities - The company completed sale-leaseback transactions for Bally's Quad Cities and Bally's Black Hawk properties with GLPI for $150.0 million in Q2 2022, recording a net gain of $50.8 million[164] - Operating lease liabilities were $668.7 million and right-of-use assets were $642.9 million as of June 30, 2022[169] Operating Lease Expense | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Operating lease cost | $17,265 | $6,363 | $32,564 | $7,695 | | Variable lease cost | $2,001 | $780 | $3,818 | $918 | | Short-term lease expense | $4,966 | $1,769 | $8,703 | $2,823 | | Total lease expense | $24,232 | $8,912 | $45,085 | $11,436 | - Future operating lease payments total $1.05 billion, with a weighted average remaining lease term of 14.4 years and a weighted average discount rate of 6.5% as of June 30, 2022[174][173] 14. EQUITY PLANS Details the company's equity incentive plans, including restricted awards and share-based compensation - The company granted 356,709 restricted awards with an aggregate intrinsic value of $12.0 million under the 2021 Incentive Plan during the six months ended June 30, 2022[178] - Share-based compensation expense was $6.3 million for Q2 2022 (up from $3.9 million in Q2 2021) and $11.4 million for YTD 2022 (up from $8.4 million in YTD 2021)[179] 15. BENEFIT PLANS Provides information on the company's defined benefit pension plan and defined contribution plan contributions Dover Downs Defined Benefit Pension Plan Net Periodic Benefit Income | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net periodic benefit income | $(241) | $(133) | $(482) | $(266) | - Employer contributions to defined contribution plans were $1.9 million for Q2 2022 (up from $0.8 million in Q2 2021) and $3.9 million for YTD 2022 (up from $1.3 million in YTD 2021)[186] 16. STOCKHOLDERS' EQUITY Details changes in stockholders' equity, including share repurchases and outstanding shares - The company repurchased 350,616 common shares for $13.3 million during the six months ended June 30, 2022, under its capital return program, with $334.6 million remaining available[187][188][190] - As of June 30, 2022, 52,577,251 common shares were issued and outstanding, with an additional 14,681,305 incremental shares expected to be issued from warrants, options, and contingent consideration[194][195] - The company increased its authorized common stock from 100 million to 200 million shares and authorized 10 million shares of preferred stock on May 18, 2021[193] 17. ACCUMULATED OTHER COMPREHENSIVE LOSS Presents changes in accumulated other comprehensive loss, primarily from foreign currency adjustments Changes in Accumulated Other Comprehensive Loss (Six Months Ended June 30, 2022) | (in thousands) | Foreign Currency Translation Adjustment | Benefit Plans | Total | | :--- | :--- | :--- | :--- | | Accumulated other comprehensive loss at December 31, 2021 | $(68,731) | $(976) | $(69,707) | | Current period other comprehensive loss | $(270,355) | $0 | $(270,355) | | Accumulated other comprehensive loss at June 30, 2022 | $(339,086) | $(976) | $(340,062) | - Accumulated other comprehensive loss significantly increased to $(340.1) million as of June 30, 2022, primarily due to a $(270.4) million foreign currency translation adjustment loss during the period[199] 18. SEGMENT REPORTING Provides financial information by reportable segment, including Adjusted EBITDA - The company operates in three reportable segments: Casinos & Resorts, North America Interactive, and International Interactive, with 'Other' including unallocated corporate expenses[201][202] Adjusted EBITDA by Segment | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Casinos & Resorts | $88,001 | $91,806 | $161,791 | $149,426 | | North America Interactive | $(16,961) | $93 | $(36,286) | $1,490 | | International Interactive | $82,612 | $0 | $155,939 | $0 | | Other | $(12,428) | $(9,074) | $(25,267) | $(16,219) | | Total Adjusted EBITDA | $141,224 | $82,825 | $256,177 | $134,697 | - Consolidated Adjusted EBITDA increased by 70.5% to $141.2 million for Q2 2022 and by 90.2% to $256.2 million for YTD 2022, driven by the International Interactive segment's contribution[205][262] - North America Interactive segment's Adjusted EBITDA decreased to $(17.0) million for Q2 2022 and $(36.3) million for YTD 2022, mainly due to increased operating costs[205][263] 19. EARNINGS (LOSS) PER SHARE Presents basic and diluted earnings per share calculations and weighted average shares outstanding Earnings Per Share | (in thousands, except per share data) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net income | $59,501 | $68,942 | $61,390 | $58,237 | | Basic earnings per share | $0.98 | $1.43 | $1.02 | $1.39 | | Diluted earnings per share | $0.98 | $1.40 | $1.02 | $1.37 | | Weighted average shares outstanding - diluted | 60,541 | 49,102 | 60,332 | 42,374 | - Diluted EPS for Q2 2022 was $0.98, down from $1.40 in Q2 2021, despite an increase in net income for the six-month period[211][261] - Weighted average diluted shares outstanding increased to 60,541 thousand for Q2 2022 from 49,102 thousand in Q2 2021, impacting EPS calculations[211] 20. SUBSEQUENT EVENTS Discloses significant events occurring after the reporting period, including a common stock tender offer - On July 27, 2022, the company completed a modified Dutch auction tender offer, repurchasing 4.7 million shares of common stock for $103.3 million at $22.00 per share[214] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes Bally's financial condition and results, covering strategy, acquisitions, and external factors Cautionary Note Regarding Forward-Looking Statements Highlights that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties, including unexpected costs from acquisitions, rapid growth challenges, digitalization impact, COVID-19 uncertainties, regulatory restrictions, and debt limitations[217][218] Overview Provides a general overview of Bally's global gaming, hospitality, and entertainment business and strategic focus - Bally's is a global gaming, hospitality, and entertainment company with 14 land-based casinos and one horse racetrack in ten US states, and online gaming businesses (iCasino, online bingo, sportsbook, DFS, F2P games) with a global presence[221][222] - The company's strategy focuses on acquiring and developing new gaming opportunities, reinvesting in existing operations, and expanding interactive gaming, aiming for an omni-channel gaming and entertainment experience[223][224] - The Gamesys acquisition (October 2021) is expected to enhance interactive offerings in North America and unify player databases for cross-selling opportunities across land-based and online platforms[225][226] - The company's operating structure includes three reportable segments: Casinos & Resorts, North America Interactive, and International Interactive[227][228][229] - Adjusted EBITDA is the main key performance indicator, used to analyze business performance, evaluate operating results, and assess the ability to service debt and fund capital expenditures[234][235] Results of Operations Analyzes the company's financial performance, including total revenue, operating income, net income, and Adjusted EBITDA Total Revenue and Income from Operations | (in millions) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $552.5 | $267.7 | $1,100.8 | $460.0 | | Income from operations | $85.3 | $80.5 | $107.8 | $110.0 | | Net income | $59.5 | $68.9 | $61.4 | $58.2 | - Total revenue for Q2 2022 increased by 106.4% YoY to $552.5 million, and by 139.3% YTD to $1.10 billion, primarily due to 2021 acquisitions and reduced COVID-19 restrictions[250][251] - Operating costs and expenses increased by 149.6% for Q2 2022 and 183.7% for YTD 2022, largely due to the inclusion of 2021 acquisitions, especially Gamesys[252] - Income from operations for Q2 2022 was $85.3 million (up from $80.5 million in Q2 2021), while YTD 2022 income from operations was $107.8 million (down from $110.0 million in YTD 2021)[258] - Net income for Q2 2022 decreased by 13.7% to $59.5 million, but YTD 2022 net income increased by 5.4% to $61.4 million[261] Consolidated Adjusted EBITDA | (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Adjusted EBITDA | $141,224 | $82,825 | $256,177 | $134,697 | Critical Accounting Estimates States no material changes in critical accounting estimates occurred during the reporting period - There were no material changes in critical accounting estimates during the period covered by this Quarterly Report on Form 10-Q[269] Recent Accounting Pronouncements Refers to Note 3 for details on recent accounting pronouncements affecting the company - Refer to Note 3 'Recently Adopted and Issued Accounting Pronouncements' for details on recent accounting pronouncements affecting the company[270] Liquidity and Capital Resources Discusses the company's liquidity sources, cash flow activities, capital expenditures, and future development plans - The company's primary liquidity sources are cash on hand, operating cash flows, Revolving Credit Facility borrowings, and proceeds from debt/equity issuances, with a strategy to maintain moderate leverage for growth opportunities[271] Cash Flow Summary | (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $164,544 | $34,225 | | Net cash used in investing activities | $(55,834) | $(235,727) | | Net cash (used in) provided by financing activities | $(140,790) | $948,147 | | Net change in cash and cash equivalents and restricted cash | $(43,484) | $747,128 | - Capital expenditures for YTD 2022 were $116.1 million (up from $35.8 million in YTD 2021), with significant planned projects at Bally's Twin River ($50 million), Bally's Atlantic City ($40 million), and Bally's Kansas City ($50 million)[290][291] - The company plans to develop Bally's Chicago, a $1.7 billion destination casino resort, and a Category 4 licensed casino in Centre County, Pennsylvania, estimated at $120 million[292][293] - On June 28, 2022, Bally's entered a binding term sheet with GLP Capital to acquire real property assets of Hard Rock Biloxi and Bally's Tiverton for $635 million, with an option for Bally's Twin River for $771 million, to be leased back under the Master Lease[286] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk Discusses the company's exposure to interest rate and foreign currency risks and their management - The company is exposed to interest rate risk from $1.94 billion in variable rate debt; a hypothetical 1% increase in interest rates would raise interest expense by approximately $19.4 million over 12 months[299] - Foreign currency risk arises from operations outside the US, with a vast majority of international revenues in British Pound Sterling (GBP), making the company susceptible to GBP/USD exchange rate movements[301] - Foreign currency transaction gains were $1.8 million for Q2 2022 and $2.0 million for YTD 2022[301] ITEM 4. Controls and Procedures Confirms the effectiveness of disclosure controls and reports no material changes in internal control - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[302] - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2022[303] PART II - OTHER INFORMATION Includes legal proceedings, risk factors, exhibits, and official signatures for the report ITEM 1. Legal Proceedings Discloses the company's involvement in various legal proceedings, with estimated losses not material - The company is party to various legal proceedings, which are costly, time-consuming, and unpredictable, but estimated losses are not material to its consolidated financial condition or results of operations[305] ITEM 1A. Risk Factors States no material changes to risk factors were reported since the prior Annual Report on Form 10-K - No material changes to the risk factors were reported since the Annual Report on Form 10-K for the year ended December 31, 2021[306] ITEM 6. Exhibits Provides a list of exhibits filed with the Quarterly Report on Form 10-Q - The exhibit index includes certifications of Principal Executive and Financial Officers (31.1, 31.2, 32.1, 32.2) and various XBRL taxonomy documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[308] Signatures Contains the official signatures of Bally's Corporation's CFO and CEO - The report is signed by Robert M. Lavan, Chief Financial Officer, and Lee D. Fenton, Chief Executive Officer, on August 4, 2022[310]