Bally's (US:BALY)2022-11-08 16:00Business Operations - As of September 30, 2022, the company owns and manages 15 land-based casinos and one horse racetrack, operating approximately 14,400 slot machines and 600 table games[219]. - The company plans to develop a destination casino resort in downtown Chicago, Illinois, and has signed an agreement with the City of Chicago for this project[221]. - The company aims to invest $100 million in Rhode Island over an extended term, including expansions and new amenities at Bally's Twin River[229]. - The company has expanded its interactive business by launching the Bally Sports Network and acquiring Bally's Interactive, enhancing its omni-channel gaming offerings[221]. - The company operates under a Regulatory Agreement in Rhode Island, which includes financial covenants and restrictions on acquisitions and competitive activities[227]. - The COVID-19 pandemic has significantly impacted operations, although all properties are currently open with minimal restrictions[230]. - The company has diversified its portfolio through acquisitions, mitigating susceptibility to regional economic downturns and regulatory changes[220]. - The company’s business is organized into three segments: Casinos & Resorts, North America Interactive, and International Interactive[224]. Financial Performance - Total revenue for Q3 2022 was $578.2 million, a 83.8% increase from $314.8 million in Q3 2021[236]. - Income from operations for Q3 2022 was $53.7 million, compared to $27.7 million in Q3 2021, reflecting a 93.5% increase[236]. - For the first nine months of 2022, total revenue reached $1.68 billion, up 116.5% from $774.8 million in the same period last year[236]. - The company reported a net income of $0.6 million for Q3 2022, a significant recovery from a net loss of $57.6 million in Q3 2021[238]. - Gaming revenue for Q3 2022 was $465.7 million, a 100.9% increase from $231.8 million in Q3 2021[244]. - Non-gaming revenue for Q3 2022 was $112.5 million, up 35.6% from $83.0 million in Q3 2021[244]. - Total operating costs and expenses for Q3 2022 were $524.5 million, representing 90.7% of total revenue[240]. - Advertising, general and administrative expenses for Q3 2022 were $192.0 million, which is 33.2% of total revenue[240]. - The company has revised its calculation of Adjusted EBITDA to exclude launch costs and preopening expenses starting Q3 2022[235]. - Total revenue for the three months ended September 30, 2022 increased by 83.7% to $578.2 million, compared to $314.8 million in the same period last year[248]. - Incremental revenues from 2021 acquisitions contributed $232.4 million and $845.5 million to total revenue for the three and nine months ended September 30, 2022, respectively[249]. - Total operating costs and expenses for the three months ended September 30, 2022 increased by 82.8% to $524.6 million, compared to $287.0 million in the same period last year[250]. - Income from operations for the three months ended September 30, 2022 was $53.7 million, up from $27.7 million in the comparable period in 2021[256]. - Net income for the three months ended September 30, 2022 was $0.6 million, or $0.01 per diluted share, an increase of 101.0% from a net loss of $57.6 million in the same period last year[260]. - Consolidated Adjusted EBITDA for the three months ended September 30, 2022 was $151.0 million, up 93.9% from $77.8 million in the same period last year[261]. - Adjusted EBITDA for the North America Interactive segment for the three months ended September 30, 2022 decreased to $(19.7) million, mainly due to increased operating costs[262]. - Depreciation and amortization for the three months ended September 30, 2022 was $73.9 million, an increase of $44.9 million compared to the same period last year[255]. - The effective tax rate for the three months ended September 30, 2022 was 65.7%, compared to 8.6% for the same period in 2021[259]. - Total other expense for the three months ended September 30, 2022 was $51.9 million, a decrease from $90.8 million in the same period last year[257]. - Net income for the three months ended September 30, 2022, was $50,970,000, compared to a net loss of $22,675,000 for North America Interactive[263]. - Adjusted EBITDA for the same period was $106,905,000, with a significant increase from the previous year's adjusted EBITDA of $93,102,000[264]. Cash Flow and Capital Expenditures - The company reported a net cash provided by operating activities of $225,316,000 for 2022, up from $70,843,000 in 2021[270]. - Total cash and cash equivalents at the end of the period were $220,131,000, a decrease from $2,009,017,000 at the beginning of the period[270]. - The company incurred interest expenses of $53,000 for the three months ended September 30, 2022, compared to $31,311,000 for the same period in the previous year[264]. - The provision for income taxes for the three months ended September 30, 2022, was $17,394,000, compared to a benefit of $4,683,000 in the previous year[263]. - The company reported a depreciation and amortization expense of $15,536,000 for the three months ended September 30, 2022[263]. - Acquisition, integration, and restructuring costs amounted to $164,000 for the three months ended September 30, 2022[263]. - The company has maintained a strategy of moderate leverage and substantial capital resources to invest in its businesses and acquire properties[269]. - Adjusted EBITDAR for the three months ended September 30, 2022, was $118,740,000, reflecting the company's operational efficiency[263]. - Net cash provided by operating activities for the nine months ended September 30, 2022, was $225.3 million, a significant increase from $70.8 million in the same period of 2021[271]. - Net cash used in investing activities decreased to $69.5 million for the nine months ended September 30, 2022, down from $302.1 million in 2021, primarily due to a $223.1 million reduction in cash paid for acquisitions[272]. - Net cash used in financing activities was $189.9 million for the nine months ended September 30, 2022, compared to net cash provided of $2.16 billion in 2021, largely due to the absence of senior note proceeds and equity issuances[273]. - Capital expenditures for the nine months ended September 30, 2022, were $167.4 million, up from $65.1 million in the same period last year, with expectations to exceed 2021 amounts[285]. - The company plans to invest approximately $100 million in Bally's Twin River, with an estimated spending of $50 million in 2022 for expansion and improvements[286]. - Bally's Chicago project is set to be a $1.7 billion destination casino resort, featuring 3,400 slots and 170 table games, with a temporary casino expected to open by the end of the first half of 2023[289]. Debt and Interest Rate Exposure - The company has a total of $1.70 billion in minimum rent payable under operating leases as of September 30, 2022[283]. - As of September 30, 2022, the company had $2.01 billion of variable rate debt outstanding under its Term Loan and Revolving Credit Facilities[296]. - A hypothetical increase of 1% in the effective interest rate would result in an increase in interest expense of approximately $20.1 million over the next 12 months[296]. - The company has $215.4 million available for use under its capital return program as of September 30, 2022[274]. - The company has not historically utilized derivative financial instruments for trading purposes and does not believe that fluctuations in interest rates had a material effect on its business during the three months ended September 30, 2022 and 2021[297]. Foreign Currency Exposure - Foreign currency transaction gains for the three months ended September 30, 2022 were $0.3 million, while losses for the same period in 2021 were $42.9 million[298]. - For the nine months ended September 30, 2022, foreign currency transaction gains were $2.2 million, compared to losses of $43.4 million in the same period of 2021[298]. - A vast majority of the company's revenues are derived from the UK market and are conducted in British Pound Sterling (GBP), making them susceptible to exchange rate fluctuations between GBP and USD[298]. - The company has not historically used operational hedges or forward currency exchange rate contracts to manage the impact of currency exchange rate fluctuations on earnings and cash flows[298].